[Federal Register Volume 63, Number 126 (Wednesday, July 1, 1998)]
[Rules and Regulations]
[Pages 35809-35820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17538]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 538
Sudanese Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Department of the 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 Sudanese Sanctions Regulations to implement
the President's declaration of a national emergency and imposition of
sanctions against Sudan.
EFFECTIVE DATE: July 1, 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:
Electronic Availability
This document is available as an electronic file on The Federal
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(``TEL'') in the ``Business, Trade and Labor Mall'' of the FedWorld
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file ``T11FR00.EXE'' in TEL. For Internet access, use one of the
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Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov
(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 November 3, 1997, the President issued Executive Order 13067 (62
FR 59989, Nov. 5, 1997), declaring a national emergency with respect to
``the policies and actions of the Government of Sudan,'' and invoking
the authority, inter alia, of the International Emergency Economic
Powers Act (50 U.S.C. 1701-1706). The order blocks all property and
interests in property of the Government of Sudan, its agencies,
instrumentalities, and controlled entities, including the Central Bank
of Sudan, that are in the United States, that are or hereafter come
within the United States, or that are or hereafter come within the
possession or control of U.S. persons, including their overseas
branches; and orders other specific sanctions against Sudan. The order
also authorizes the Secretary of the Treasury, in consultation with the
Secretary of State and, as appropriate, other agencies, 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 Sudanese Sanctions
Regulations (the ``Regulations'').
Section 538.201 of the Regulations, implementing section 1 of
Executive Order 13067 (the ``Executive Order''), blocks all property
and interests in property of the Government of Sudan, its agencies,
instrumentalities, and controlled entities, including the Central Bank
of Sudan, that are in the United States, that hereafter come within the
United States, or that are or hereafter come within the possession or
control of U.S. persons, including their overseas branches. As
interpreted by Sec. 538.305 of the Regulations, Sec. 538.201 also
blocks all property and interests in property of persons determined by
the Secretary of the Treasury, in consultation with the Secretary of
State, to be owned or controlled by, or to be acting on behalf of, the
Government of Sudan. Persons coming within any of these categories are
called specially designated nationals (``SDNs''). Section 538.204 of
the Regulations, implementing section 2(a) of the Executive Order,
generally prohibits the importation into the United States of goods or
services of Sudanese origin. Section 538.205 of the Regulations,
implementing section 2(b) of the Executive Order, generally prohibits
the exportation or reexportation to Sudan of goods, technology or
services from the United States, by a U.S. person, or requiring the
issuance of a license by a Federal agency. Section 538.206 of the
Regulations, implementing section 2(c) of the Executive Order,
prohibits the facilitation by a U.S. person of the exportation or
reexportation of goods, technology or services to or from Sudan.
Section 538.207 of the Regulations, implementing section 2(d) of the
Executive Order, prohibits the performance by any U.S. person of any
contract, including a financing contract, in support of an industrial,
commercial, public utility, or governmental project in Sudan. Section
538.208 of the Regulations, implementing section 2(e) of the Executive
Order, prohibits the grant or extension of credits or loans by any U.S.
person to the Government of Sudan. Section 538.209 of the Regulations,
implementing section 2(f) of the Executive Order, prohibits
transactions relating to the transportation of cargo to or from Sudan.
Pursuant to section 3 of the Executive Order, Sec. 538.211 of the
Regulations exempts certain transactions from the prohibitions of the
Executive Order and Regulations.
Transactions otherwise prohibited under this part but found to be
consistent with U.S. policy may be authorized by a general license
contained in subpart E or by a specific license issued pursuant to the
procedures described in subpart D of part 501 of 31 CFR chapter V.
Penalties for violations of the Regulations are described in subpart G
of the Regulations.
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
[[Page 35810]]
public participation and delay in effective date are inapplicable.
Because no notice of proposed rulemaking is required for this rule, the
Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.
Paperwork Reduction Act
The Regulations are being issued without prior notice and public
comment procedure pursuant to the APA. Pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507), the collections of information
contained in the Regulations have been submitted to and approved by the
Office of Management and Budget (``OMB'') pending public comment and
has been assigned control number 1505-0169. 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.
Other collections of information related to the Regulations are
contained in part 501 of this chapter (the ``Reporting and Procedures
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. 3507), the collections of information in part 501 have been
approved by the Office of Management and Budget (``OMB'') under control
number 1505-1604.
The new collections of information in the Regulations are contained
in Secs. 538.506 and 538.521. Section 538.506(d) imposes a reporting
requirement in lieu of specific licensing for performance of certain
trade transactions pursuant to contracts entered into prior to November
4, 1997. This information will be used to determine whether persons
subject to the Regulations are in compliance with the applicable
requirements, and to determine whether and to what extent civil penalty
or other enforcement action is appropriate.
Section 538.521 requires nongovernmental organizations involved in
humanitarian or religious activities in Sudan to obtain a registration
number to engage in transactions otherwise prohibited by the
Regulations. This information will be used to register applicants as
nongovernmental organizations and to determine whether persons subject
to the Regulations are in compliance with the applicable requirements.
The Regulations do not provide for confidential treatment of
reports submitted pursuant to Secs. 538.506 and 538.521. However, it is
the policy of the Office of Foreign Assets Control to protect the
confidentiality of information in appropriate cases pursuant to the
exemptions from disclosure provided under the Freedom of Information
Act (5 U.S.C. 552) and the Privacy Act (5 U.S.C. 552a).
The likely respondents and record keepers are humanitarian
organizations, business organizations, and financial institutions.
The estimated total annual reporting and/or recordkeeping burden:
100 hours.
The estimated annual burden per respondent/record keeper varies
from 1-3 hours, depending on individual circumstances, with and
estimated average of 2 hours.
Estimated number of respondents and/or record keepers: 50.
Estimated annual frequency of responses: 1.
Comments are invited on: (a) whether this collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information has practical utility; (b) the
accuracy of the agency's estimate of the burden of the collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; (d) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques or other forms of information
technology; and (e) estimated capital or start-up costs and costs of
operation maintenance, and purchase of services to provide information.
Comments concerning the above information, the accuracy of
estimated average burden, and suggestions for reducing this burden
should be directed to the Office of Management and Budget, Paperwork
Reduction Project, control number 1505-0169, Washington, DC 20503, with
a copy to the Office of Foreign Assets Control, U.S. Department of the
Treasury, 1500 Pennsylvania Ave., NW-Annex, Washington, DC 20220. Any
such comments should be submitted not later than August 31, 1998.
Comments on aspects of the Regulations other than those involving
collections of information should not be sent to the OMB.
List of Subjects in 31 CFR Part 538
Administrative practice and procedure, Banks, banking, Blocking of
assets, Exports, Foreign trade, Humanitarian aid, Imports, Penalties,
Reporting and recordkeeping requirements, Specially designated
nationals, Sudan, Terrorism, Transportation.
For the reasons set forth in the preamble, 31 CFR part 538 is added
to read as follows:
PART 538--SUDANESE SANCTIONS REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
538.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
538.201 Prohibited transactions involving blocked property.
538.202 Effect of transfers violating the provisions of this part.
538.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
538.204 Prohibited importation of goods or services from Sudan.
538.205 Prohibited exportation and reexportation of goods,
technology, or services to Sudan.
538.206 Prohibited facilitation.
538.207 Prohibited performance of contracts.
538.208 Prohibited grant or extension of credits or loans to the
Government of Sudan.
538.209 Prohibited transportation-related transactions involving
Sudan.
538.210 Evasions; attempts; conspiracies.
538.211 Exempt transactions.
Subpart C--General Definitions
538.301 Blocked account; blocked property.
538.302 Effective date.
538.303 Entity.
538.304 General license.
538.305 Government of Sudan.
538.306 Information and informational materials.
538.307 Interest.
538.308 License.
538.309 Person.
538.310 Property; property interest.
538.311 Specific license.
538.312 Sudanese origin.
538.313 Transfer.
538.314 United States.
538.315 United States person; U.S. person.
538.316 U.S. financial institution.
Subpart D--Interpretations
538.401 Reference to amended sections.
538.402 Effect of amendment.
538.403 Termination and acquisition of an interest in blocked
property.
538.404 Setoffs prohibited.
538.405 Transactions incidental to a licensed transaction.
538.406 Exportation of services; performance of service contracts;
legal services.
538.407 Facilitation by a United States person.
538.408 Offshore transactions.
538.409 Transshipments through the United States prohibited.
538.410 Imports of Sudanese goods from third countries;
transshipments.
538.411 Exports to third countries; transshipments.
538.412 Operation of accounts.
538.413 Funds transfers.
538.414 Loans or extensions of credit.
538.415 Payments involving Sudan.
538.416 Payments from blocked accounts to U.S. exporters and for
other obligations prohibited.
[[Page 35811]]
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
538.501 Effect of license or authorization.
538.502 Exclusion from licenses and authorizations.
538.503 Payments and transfers to blocked accounts in U.S. financial
institutions.
538.504 Entries in certain accounts for normal service charges
authorized.
538.505 Provision of certain legal services to the Government of
Sudan, persons in Sudan, or benefitting Sudan.
538.506 30-day delayed effective date for pre-November 4, 1997 trade
contracts involving Sudan.
538.507 Reexports by non-U.S. persons.
538.508 Certain payments by the Government of Sudan of obligations
to persons within the United States authorized.
538.509 Certain services relating to participation in various events
authorized.
538.510 Importation and exportation of certain gifts authorized.
538.511 Accompanied baggage authorized.
538.512 Transactions related to telecommunications authorized.
538.513 Transactions related to mail authorized.
538.514 Certain transactions related to patents, trademarks and
copyrights authorized.
538.515 Certain imports for diplomatic or official personnel
authorized.
538.516 Diplomatic pouches.
538.517 Allowable payments for overflights of Sudanese airspace.
538.518 Household goods and personal effects.
538.519 Aircraft and maritime safety.
538.520 Extensions or renewals of loans and credits.
538.521 Registration of nongovernmental organizations.
538.522 Transactions related to U.S. citizens residing in Sudan.
Subpart F--Reports
538.601 Records and reports.
Subpart G--Penalties
538.701 Penalties.
538.702 Prepenalty notice.
538.703 Response to prepenalty notice; informal settlement.
538.704 Penalty imposition or withdrawal.
538.705 Administrative collection; referral to United States
Department of Justice.
Subpart H--Procedures
538.801 Procedures.
538.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
538.901 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651,
1701-1706; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230.
Subpart A--Relation of This Part to Other Laws andRegulations
Sec. 538.101 Relation of this part to other laws and regulations.
(a) This part is separate from, and independent of, the other parts
of this chapter with the exception of part 501 of this chapter, the
recordkeeping and reporting requirements and license application and
other procedures of which apply to this part. 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. No license or
authorization contained in or issued pursuant to any other provision of
law or regulation 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. 538.201 Prohibited transactions involving blocked property.
(a) Except as authorized by regulations, orders, directives,
rulings, instructions, licenses, or otherwise, no property or interests
in property of the Government of Sudan, that are in the United States,
that hereafter come within the United States, or that are or hereafter
come within the possession or control of U.S. persons, including their
overseas branches, may be transferred, paid, exported, withdrawn or
otherwise dealt in.
(b) Unless otherwise authorized by this part or by a specific
license expressly referring to this section, the transfer (including
the transfer on the books of any issuer or agent thereof), disposition,
transportation, importation, exportation, or withdrawal of, or the
endorsement or guaranty of signatures on, or otherwise dealing in any
security (or evidence thereof) registered or inscribed in the name of
the Government of Sudan, and held within the possession or control of a
U.S. person is prohibited, irrespective of the fact that at any time
(either prior to, on, or subsequent to the effective date) the
registered or inscribed owner thereof may have, or appears to have,
assigned, transferred, or otherwise disposed of any such security.
(c) When a transaction results in the blocking of funds at a
financial institution pursuant to this section and a party to the
transaction believes the funds have been blocked due to mistaken
identity, that party may seek to have such funds unblocked pursuant to
the administrative procedures set forth in Sec. 501.806 of this
chapter.
Sec. 538.202 Effect of transfers violating the provisions of this
part.
(a) Any transfer after the effective date, which is in violation of
any provision of this part or of any regulation, order, directive,
ruling, instruction, license, or other authorization hereunder and
involves any property or interest in property blocked pursuant to
Sec. 538.201 is null and void and shall not be the basis for the
assertion or recognition of any interest in or right, remedy, power or
privilege with respect to such property or property interests.
(b) No transfer before the effective date shall be the basis for
the assertion or recognition of any right, remedy, power, or privilege
with respect to, or interest in, any property or interest in property
blocked pursuant to Sec. 538.201, unless the person with whom such
property is held or maintained, prior to such date, had written notice
of the transfer or by any written evidence had recognized such
transfer.
(c) Unless otherwise provided, an appropriate license or other
authorization issued by or pursuant to the direction or authorization
of the Director of the Office of Foreign Assets Control before, during,
or after a transfer shall validate such transfer or render it
enforceable to the same extent that it would be valid or enforceable
but for the provisions of the International Emergency Economic Powers
Act, this part, and any regulation, order, directive, ruling,
instruction, or license issued hereunder.
(d) Transfers of property which otherwise would be null and void or
unenforceable by virtue of the provisions of this section shall not be
deemed to be null and void or unenforceable as to any person with whom
such property was held or maintained (and as to such person only) in
cases in which such person is able to establish to the satisfaction of
the Director of the Office of Foreign Assets Control each of the
following:
(1) Such transfer did not represent a willful violation of the
provisions of this part by the person with whom such property was held
or maintained;
(2) The person with whom such property was held or maintained did
not have reasonable cause to know or suspect, in view of all the facts
and circumstances known or available to such person, that such transfer
required
[[Page 35812]]
a license or authorization by or pursuant to this part and was not so
licensed or authorized, or if a license or authorization did purport to
cover the transfer, that such license or authorization had been
obtained by misrepresentation of a third party or the withholding of
material facts or was otherwise fraudulently obtained; and
(3) The person with whom such property was held or maintained filed
with the Office of Foreign Assets Control a report setting forth in
full the circumstances relating to such transfer promptly upon
discovery that:
(i) Such transfer was in violation of the provisions of this part
or any regulation, ruling, instruction, license, or other direction or
authorization hereunder; or
(ii) Such transfer was not licensed or authorized by the Director
of the Office of Foreign Assets Control; or
(iii) If a license did purport to cover the transfer, such license
had been obtained by misrepresentation of a third party or the
withholding of material facts or was otherwise fraudulently obtained.
Note to paragraph (d): The filing of a report in accordance with
the provisions of paragraph (d)(3) of this section shall not be
deemed evidence that the terms of paragraphs (d)(1) and (2) of this
section have been satisfied.
(e) Unless licensed or authorized pursuant to this part, any
attachment, judgment, decree, lien, execution, garnishment, or other
judicial process is null and void with respect to any property or
interest in property blocked pursuant to Sec. 538.201.
Sec. 538.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
(a) Except as provided in paragraphs (c) or (d) of this section, or
as otherwise directed by the Office of Foreign Assets Control, any U.S.
person holding funds, such as currency, bank deposits, or liquidated
financial obligations, subject to Sec. 538.201(a) shall hold or place
such funds in a blocked interest-bearing account located in the United
States.
(b)(1) For purposes of this section, the term blocked interest-
bearing account means a blocked account:
(i) In a federally-insured U.S. bank, thrift institution, or credit
union, provided the funds are earning interest at rates which are
commercially reasonable; or
(ii) With a broker or dealer registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, provided
the funds are invested in a money market fund or in U.S. Treasury
Bills.
(2) For purposes of this section, a rate is commercially reasonable
if it is the rate currently offered to other depositors on deposits or
instruments of comparable size and maturity.
(3) Funds held or placed in a blocked account pursuant to this
paragraph (b) may not be invested in instruments the maturity of which
exceeds 180 days. If interest is credited to a separate blocked account
or sub-account, the name of the account party on each account must be
the same.
(c) Blocked funds held in instruments the maturity of which exceeds
180 days at the time the funds become subject to Sec. 538.201 may
continue to be held until maturity in the original instrument, provided
any interest, earnings, or other proceeds derived therefrom are paid
into a blocked interest-bearing account in accordance with paragraph
(b) or (d) of this section.
(d) Blocked funds held in accounts or instruments outside the
United States at the time the funds become subject to Sec. 538.201 may
continue to be held in the same type of accounts or instruments,
provided the funds earn interest at rates which are commercially
reasonable.
(e) This section does not create an affirmative obligation for the
holder of blocked tangible property, such as chattels or real estate,
or of other blocked property, such as debt or equity securities, to
sell or liquidate such property at the time the property becomes
subject to Sec. 538.201. However, the Office of Foreign Assets Control
may issue licenses permitting or directing such sales in appropriate
cases.
(f) Funds subject to this section may not be held, invested, or
reinvested in a manner which provides immediate financial or economic
benefit or access to the Government of Sudan or its entities, nor may
their holder cooperate in or facilitate the pledging or other attempted
use as collateral of blocked funds or other assets.
Sec. 538.204 Prohibited importation of goods or services from Sudan.
Except as otherwise authorized, the importation into the United
States, directly or indirectly, of any goods or services of Sudanese
origin, other than information or informational materials, is
prohibited.
Sec. 538.205 Prohibited exportation and reexportation of goods,
technology, or services to Sudan.
Except as otherwise authorized, the exportation or reexportation,
directly or indirectly, to Sudan of any goods, technology (including
technical data, software, or other information) or services from the
United States or by a United States person, wherever located, or
requiring the issuance of a license by a Federal agency is prohibited,
except for information or informational materials or donations of
articles intended to relieve human suffering, such as food, clothing,
and medicine.
Sec. 538.206 Prohibited facilitation.
Except as otherwise authorized, the facilitation by a United States
person, including but not limited to brokering activities, of the
exportation or reexportation of goods, technology, or services from
Sudan to any destination, or to Sudan from any location, is prohibited.
Sec. 538.207 Prohibited performance of contracts.
Except as otherwise authorized, the performance by any United
States person of any contract, including a financing contract, in
support of an industrial, commercial, public utility, or governmental
project in Sudan is prohibited.
Sec. 538.208 Prohibited grant or extension of credits or loans to the
Government of Sudan.
Except as otherwise authorized, the grant or extension of credits
or loans by any United States person to the Government of Sudan is
prohibited.
Sec. 538.209 Prohibited transportation-related transactions involving
Sudan.
Except as otherwise authorized, the following are prohibited:
(a) Any transaction by a U.S. person relating to transportation of
cargo to or from Sudan;
(b) The provision of transportation of cargo to or from the United
States by any Sudanese person or any vessel or aircraft of Sudanese
registration; or
(c) The sale in the United States by any person holding authority
under 49 U.S.C. subtitle VII of any transportation of cargo by air that
includes any stop in Sudan.
Sec. 538.210 Evasions; attempts; conspiracies.
Any transaction by any 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. Any conspiracy formed for the purpose of
engaging in a transaction prohibited by this part is prohibited.
Sec. 538.211 Exempt transactions.
(a) Personal Communications. The prohibitions contained in this
part do not apply to any postal, telegraphic, telephonic, or other
personal
[[Page 35813]]
communication, which does not involve the transfer of anything of
value.
(b) Information and informational materials. (1) The importation
from any country and the exportation to any country of information or
informational materials as defined in Sec. 538.306, whether commercial
or otherwise, regardless of format or medium of transmission, are
exempt from the prohibitions and regulations of this part.
(2) This section does not authorize transactions related to
information and informational materials not fully created and in
existence at the date of the transactions, or to the substantive or
artistic alteration or enhancement of informational materials, or to
the provision of marketing and business consulting services. Such
prohibited transactions include, without limitation, payment of
advances for informational materials not yet created and completed,
provision of services to market, produce or co-produce, create or
assist in the creation of information and informational materials, and
payment of royalties to the Government of Sudan or a person in Sudan
with respect to income received for enhancements or alterations made by
U.S. persons to information or informational materials imported from
the Government of Sudan or a person in Sudan.
(3) This section does not authorize transactions incident to the
exportation of software subject to the Export Administration
Regulations, 15 CFR parts 730-774, or to the exportation of goods,
technology or software for use in the transmission of any data. The
exportation of such items to the Government of Sudan or to Sudan is
prohibited, as provided in Secs. 538.201 and 538.205.
(c) Travel. The prohibitions contained in this part do not apply to
transactions ordinarily incident to travel to or from any country,
including exportation or importation of accompanied baggage for
personal use, maintenance within any country including payment of
living expenses and acquisition of goods or services for personal use,
and arrangement or facilitation of such travel including non-scheduled
air, sea, or land voyages.
(d) Official Business. The prohibitions contained in this part do
not apply to transactions for the conduct of the official business of
the Federal Government or the United Nations by employees thereof.
(e) Journalistic activity. The prohibitions contained in this part
do not apply to transactions in Sudan for journalistic activity by
persons regularly employed in such capacity by a news-gathering
organization.
Subpart C--General Definitions
Sec. 538.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any
account or property subject to the prohibition in Sec. 538.201 held in
the name of the Government of Sudan or in which the Government of Sudan
has an interest, and with respect to which payments, transfers,
exportations, withdrawals, or other dealings may not be made or
effected except pursuant to an authorization or license from the Office
of Foreign Assets Control authorizing such action.
Sec. 538.302 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. EST, November 4, 1997.
Sec. 538.303 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, or other organization.
Sec. 538.304 General license.
The term general license means any license or authorization the
terms of which are set forth in this part.
Sec. 538.305 Government of Sudan.
The term Government of Sudan includes:
(a) The state and the Government of Sudan, as well as any political
subdivision, agency, or instrumentality thereof, including the Central
Bank of Sudan;
(b) Any entity owned or controlled by the foregoing;
(c) Any person to the extent that such person is, or has been, or
to the extent that there is reasonable cause to believe that such
person is, or has been, since the effective date, acting or purporting
to act directly or indirectly on behalf of any of the foregoing; and
(d) Any other person determined by the Director of the Office of
Foreign Assets Control to be included within paragraphs (a) through (c)
of this section.
Note to Sec. 538.305: Please refer to the appendices at the end
of this chapter for listings of persons determined to fall within
this definition who have been designated pursuant to this part.
Section 501.807 of this chapter sets forth the procedures to be
followed by persons seeking administrative reconsideration of their
designation, or who wish to assert that the circumstances resulting
in the designation are no longer applicable.
Sec. 538.306 Information and informational materials.
(a)(1) For purposes of this part, the term information and
informational materials means publications, films, posters, phonograph
records, photographs, microfilms, microfiche, tapes, compact disks, CD
ROMs, artworks, and news wire feeds, and other information and
informational materials.
(2) To be considered informational materials, artworks must be
classified under chapter subheading 9701, 9702, or 9703 of the
Harmonized Tariff Schedule of the United States.
(b) The term information and informational materials with respect
to U.S. exports does not include items:
(1) That were, as of April 30, 1994, or that thereafter become,
controlled for export pursuant to section 5 of the Export
Administration Act of 1979, 50 U.S.C. App. 2401-2420 (the ``EAA''), or
section 6 of the EAA to the extent that such controls promote
nonproliferation or antiterrorism policies of the United States.
(2) With respect to which acts are prohibited by 18 U.S.C. chapter
37.
Sec. 538.307 Interest.
Except as otherwise provided in this part, the term interest when
used with respect to property (e.g., `` an interest in property'')
means an interest of any nature whatsoever, direct or indirect.
Sec. 538.308 License.
Except as otherwise specified, the term license means any license
or authorization contained in or issued pursuant to this part.
Sec. 538.309 Person.
The term person means an individual or entity.
Sec. 538.310 Property; property interest.
The terms property and property interest include, but are not
limited to, money, checks, drafts, bullion, bank deposits, savings
accounts, debts, indebtedness, obligations, notes, guarantees,
debentures, stocks, bonds, coupons, any other financial instruments,
bankers acceptances, mortgages, pledges, liens or other rights in the
nature of security, warehouse receipts, bills of lading, trust
receipts, bills of sale, any other evidences of title, ownership or
indebtedness, letters of credit and any documents relating to any
rights or obligations thereunder, powers of attorney, goods, wares,
merchandise, chattels, stocks on hand, ships, goods on ships, real
estate mortgages, deeds of trust, vendors' sales agreements, land
contracts, leaseholds,
[[Page 35814]]
ground rents, real estate and any other interest therein, options,
negotiable instruments, trade acceptances, royalties, book accounts,
accounts payable, judgments, patents, trademarks or copyrights,
insurance policies, safe deposit boxes and their contents, annuities,
pooling agreements, services of any nature whatsoever, contracts of any
nature whatsoever, and any other property, real, personal, or mixed,
tangible or intangible, or interest or interests therein, present,
future or contingent.
Sec. 538.311 Specific license.
The term specific license means any license or authorization not
set forth in this part but issued pursuant to this part.
Sec. 538.312 Sudanese origin.
The term goods or services of Sudanese origin includes:
(a) Goods produced, manufactured, grown, extracted, or processed
within Sudan;
(b) Goods which have entered into Sudanese commerce;
(c) Services performed in Sudan or by a person ordinarily resident
in Sudan who is acting as an agent, employee, or contractor of the
Government of Sudan or of a business entity located in Sudan. Services
of Sudanese origin are not imported into the United States when such
services are provided in the United States by a Sudanese national
employed or resident in the United States.
(d) The term services of Sudanese origin does not include:
(1) Diplomatic and consular services performed by or on behalf of
the Government of Sudan;
(2) Diplomatic and consular services performed by or on behalf of
the Government of the United States.
Sec. 538.313 Transfer.
The term transfer means any actual or purported act or transaction,
whether or not evidenced by writing, and whether or not done or
performed within the United States, the purpose, intent, or effect of
which is to create, surrender, release, convey, transfer, or alter,
directly or indirectly, any right, remedy, power, privilege, or
interest with respect to any property and, without limitation upon the
foregoing, shall include the making, execution, or delivery of any
assignment, power, conveyance, check, declaration, deed, deed of trust,
power of attorney, power of appointment, bill of sale, mortgage,
receipt, agreement, contract, certificate, gift, sale, affidavit, or
statement; the making of any payment; the setting off of any obligation
or credit; the appointment of any agent, trustee, or fiduciary; the
creation or transfer of any lien; the issuance, docketing, filing, or
levy of or under any judgment, decree, attachment, injunction,
execution, or other judicial or administrative process or order, or the
service of any garnishment; the acquisition of any interest of any
nature whatsoever by reason of a judgment or decree of any foreign
country; the fulfillment of any condition; the exercise of any power of
appointment, power of attorney, or other power; or the acquisition,
disposition, transportation, importation, exportation, or withdrawal of
any security.
Sec. 538.314 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 538.315 United States person; U.S. person.
The term United States person or U.S. person means any United
States citizen, permanent resident alien, entity organized under the
laws of the United States or any jurisdiction within the United States
(including foreign branches), or any person in the United States.
Sec. 538.316 U.S. financial institution.
The term U.S. financial institution means any U.S. entity
(including foreign branches) that is engaged in the business of
accepting deposits, making, granting, transferring, holding, or
brokering loans or credits, or purchasing or selling foreign exchange,
securities, commodity futures or options, or procuring purchasers and
sellers thereof, as principal or agent; including, but not limited to,
depository institutions, banks, savings banks, trust companies,
securities brokers and dealers, commodity futures and options brokers
and dealers, forward contract and foreign exchange merchants,
securities and commodities exchanges, clearing corporations, investment
companies, employee benefit plans, and U.S. holding companies, U.S.
affiliates, or U.S. subsidiaries of any of the foregoing. This term
includes those branches, offices and agencies of foreign financial
institutions which are located in the United States, but not such
institutions' foreign branches, offices, or agencies.
Subpart D--Interpretations
Sec. 538.401 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. 538.402 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, affect any act done or omitted to be done, or any civil 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 continue and may be enforced as if such amendment,
modification, or revocation had not been made.
Sec. 538.403 Termination and acquisition of an interest in blocked
property.
(a) Whenever a transaction licensed or authorized by or pursuant to
this part results in the transfer of property (including any property
interest) away from the Government of Sudan, such property shall no
longer be deemed to be property in which the Government of Sudan has or
has had an interest unless there exists in the property another
interest of the Government of Sudan, the transfer of which has not been
effected pursuant to license or other authorization.
(b) Unless otherwise specifically provided in a license or
authorization issued pursuant to this part, if property (including any
property interest) is transferred or attempted to be transferred to the
Government of Sudan, such property shall be deemed to be property in
which there exists an interest of the Government of Sudan.
Sec. 538.404 Setoffs prohibited.
A setoff against blocked property (including a blocked account),
whether by a U.S. bank or other U.S. person, is a prohibited transfer
under Sec. 538.201 if effected after the effective date.
Sec. 538.405 Transactions incidental to a licensed transaction.
Any transaction ordinarily incident to a licensed transaction and
necessary to give effect thereto is also authorized, except a
transaction by an unlicensed Sudanese governmental entity or involving
a debit to a blocked account or a transfer of blocked property not
explicitly authorized within the terms of the license.
[[Page 35815]]
Sec. 538.406 Exportation of services; performance of service
contracts; legal services.
(a) The prohibition on the exportation of services contained in
Sec. 538.205 applies to services performed on behalf of the Government
of Sudan, or where the benefit of such services is otherwise received
in Sudan, when such services are performed:
(1) In the United States;
(2) By a U.S. person, wherever located;
(3) By an entity located in the United States, including its
overseas branches; or
(4) Outside the United States by an individual U.S. person
ordinarily resident in the United States.
(b) The benefit of services performed anywhere in the world on
behalf of the Government of Sudan, including services performed for a
controlled entity or agent of the Government of Sudan, is presumed to
be received in Sudan.
(c) The prohibitions contained in Secs. 538.201 and 538.207 apply
to services performed by U.S. persons, wherever located:
(1) On behalf of the Government of Sudan;
(2) With respect to property interests of the Government of Sudan;
or
(3) In support of an industrial, commercial, public utility or
governmental project in Sudan.
(d) Example: U.S. persons may not, without specific authorization
from the Office of Foreign Assets Control, represent an individual or
entity with respect to contract negotiations, contract performance,
commercial arbitration, or other business dealings with the Government
of Sudan. See Sec. 538.505 on licensing policy with regard to the
provision of certain legal services.
Sec. 538.407 Facilitation by a United States person.
(a) The prohibition contained in Sec. 538.206 against facilitation
by a United States person of the exportation or reexportation of goods,
technology, or services between Sudan and any destination (including
the United States) bars any unlicensed action by a U.S. person that
assists or supports trading activity with Sudan by any person.
Facilitation of a trade or financial transaction that could be engaged
in directly by a U.S. person or from the United States consistent with
the prohibitions, general licenses and exemptions contained in this
part is not prohibited. Activity of a purely clerical or reporting
nature that does not further trade or financial transactions with Sudan
or the Government of Sudan is not considered prohibited facilitation.
For example, reporting on the results of a subsidiary's trade with
Sudan is not prohibited, while financing or insuring that trade or
warranting the quality of goods sold by a subsidiary to the Government
of Sudan constitutes prohibited facilitation.
(b) To avoid potential liability for U.S. persons under this part,
a U.S. parent corporation must ensure that its foreign subsidiaries act
independently of any U.S. person with respect to all transactions and
activities relating to the exportation or reexportation of goods,
technology, or services between Sudan and any other location including
but not limited to business and legal planning; decision making;
designing, ordering or transporting goods; and financial, insurance,
and other risks. See Sec. 538.505 with respect to exports of, inter
alia, certain legal services benefitting Sudan.
(c) No U.S. person may change its policies or operating procedures,
or those of a foreign affiliate or subsidiary, in order to enable a
foreign entity owned or controlled by U.S. persons to enter into a
transaction that could not be entered into directly by a U.S. person or
from the United States pursuant to this part.
(d) No U.S. person may refer to a foreign person purchase orders,
requests for bids, or similar business opportunities involving Sudan or
the Government of Sudan to which the United States person could not
directly respond as a result of the prohibitions contained in this
part.
Sec. 538.408 Offshore transactions.
(a) The prohibitions contained in Secs. 538.201 and 538.206 apply
to transactions by any U.S. person in a location outside the United
States with respect to property in which the U.S. person knows, or has
reason to know, the Government of Sudan has or has had an interest
since the effective date, or with respect to goods, technology or
services which the U.S. person knows, or has reason to know, are of
Sudanese origin or owned or controlled by the Government of Sudan.
(b) Prohibited transactions include, but are not limited to,
importation into or exportation from locations outside the United
States of, or purchasing, selling, financing, swapping, insuring,
transporting, lifting, storing, incorporating, transforming, brokering,
or otherwise dealing in, within such locations, goods, technology or
services of Sudanese origin.
(c) Examples. (1) A U.S. person may not, within the United States
or abroad, purchase, sell, finance, insure, transport, act as a broker
for the sale or transport of, or otherwise deal in, Sudanese crude oil
or sugar refined in Sudan.
(2) A U.S. person may not, within the United States or abroad,
conduct transactions of any nature whatsoever with an entity that the
U.S. person knows or has reason to know is the Government of Sudan,
including a controlled entity or agent of that Government, or which
benefits or supports the business of an entity located in Sudan, unless
the entity is licensed by the Office of Foreign Assets Control to
conduct such transactions with U.S. persons or the transaction is
generally licensed in, or exempted from the prohibitions of, this part.
Sec. 538.409 Transshipments through the United States prohibited.
(a) The prohibitions in Sec. 538.205 apply to the importation into
the United States, for transshipment or transit, of goods which are
intended or destined for Sudan, or an entity operated from Sudan.
(b) The prohibitions in Sec. 538.204 apply to the importation into
the United States, for transshipment or transit, of goods of Sudanese
origin which are intended or destined for third countries.
(c) Goods in which the Government of Sudan has an interest which
are imported into or transshipped through the United States are blocked
pursuant to Sec. 538.201.
Sec. 538.410 Imports of Sudanese goods from third countries;
transshipments.
(a) Importation into the United States from third countries of
goods containing raw materials or components of Sudanese origin is not
prohibited if those raw materials or components have been incorporated
into manufactured products or otherwise substantially transformed in a
third country.
(b) Importation into the United States of goods of Sudanese origin
that have been transshipped through a third country without being
incorporated into manufactured products or otherwise substantially
transformed in a third country are prohibited.
Sec. 538.411 Exports to third countries; transshipments.
Exportation of goods or technology (including technical data,
software, information not exempted from the prohibition of this part
pursuant to Sec. 538.211, or technical assistance) from the United
States to third countries is prohibited if the exporter knows, or has
reason to know, that the goods or technology are intended for
transshipment to Sudan (including passage through, or storage in,
intermediate destinations). The
[[Page 35816]]
exportation of goods or technology intended specifically for
incorporation or substantial transformation into a third-country
product is also prohibited if the particular product is to be used in
Sudan, is being specifically manufactured to fill a Sudanese order, or
if the manufacturer's sales of the particular product are predominantly
to Sudan.
Sec. 538.412 Operation of accounts.
The operation of an account in a financial institution for a
private Sudanese person does not constitute the exportation of a
service to Sudan; however, such operation may not include the execution
of transactions in support of transactions or activities prohibited by
subpart B of this part.
Sec. 538.413 Funds transfers.
The transfer of funds to Sudan from the United States does not
constitute an exportation of services pursuant to Sec. 538.205.
Sec. 538.414 Loans or extensions of credit.
(a) The prohibition in Sec. 538.205 applies to loans or extensions
of credit to a person in Sudan, including overdraft protection on
checking accounts, and the unlicensed renewal or rescheduling of
credits or loans in existence as of the effective date, whether by
affirmative action or operation of law.
(b) The prohibition in Sec. 538.205 applies to financial services
including loans or credits extended in any currency.
Sec. 538.415 Payments involving Sudan.
Before a United States financial institution initiates a payment
subject to the prohibitions contained in this part on behalf of any
customer, or credits a transfer subject to such prohibitions to the
account on its books of the ultimate beneficiary, the U.S. financial
institution must determine that the transfer is not prohibited by this
part.
Sec. 538.416 Payments from blocked accounts to U.S. exporters and for
other obligations prohibited.
No debits may be made to a blocked account to pay obligations to
U.S. persons or other persons, including payment for goods, technology
or services exported prior to the effective date, except as authorized
pursuant to this part.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 538.501 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, authorizes or validates 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. 538.502 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. 538.503 Payments and transfers to blocked accounts in U.S.
financial institutions.
Any payment of funds or transfer of credit in which the Government
of Sudan has any interest, that comes within the possession or control
of a U.S. financial institution, must be blocked in an account on the
books of that financial institution. A transfer of funds or credit by a
U.S. financial institution between blocked accounts in its branches or
offices is authorized, provided that no transfer is made from an
account within the United States to an account held outside the United
States, and further provided that a transfer from a blocked account may
only be made to another blocked account held in the same name.
Note to Sec. 538.503: Please refer to Sec. 501.603 of this
chapter for mandatory reporting requirements regarding financial
transfers. See also Sec. 538.203 concerning the obligation to hold
blocked funds in interest-bearing accounts.
Sec. 538.504 Entries in certain accounts for normal service charges
authorized.
(a) U.S. financial institutions are hereby authorized to debit any
blocked account with such U.S. financial institution in payment or
reimbursement for normal service charges owed to such U.S. financial
institution by the owner of such blocked account.
(b) As used in this section, the term normal service charge shall
include charges in payment or reimbursement for interest due; cable,
telegraph, or telephone charges; postage costs; custody fees; small
adjustment charges to correct bookkeeping errors; and, but not by way
of limitation, minimum balance charges, notary and protest fees, and
charges for reference books, photocopies, credit reports, transcripts
of statements, registered mail, insurance, stationery and supplies, and
other similar items.
Sec. 538.505 Provision of certain legal services to the Government of
Sudan, persons in Sudan, or benefitting Sudan.
(a) The provision to the Government of Sudan, to a person in Sudan,
or in circumstances in which the benefit is otherwise received in
Sudan, of the legal services set forth in paragraph (b) of this section
is authorized, provided that all receipts of payment therefor must be
specifically licensed. The provision of any other legal services as
interpreted in Sec. 538.406 requires the issuance of a specific
license.
(b) Specific licenses may be issued, on a case-by-case basis,
authorizing receipt, from unblocked sources, of payment of professional
fees and reimbursement of incurred expenses for the following legal
services by U.S. persons to the Government of Sudan or to a person in
Sudan:
(1) Provision of legal advice and counseling to the Government of
Sudan, to a person in Sudan, or in circumstances in which the benefit
is otherwise received in Sudan, on the requirements of and compliance
with the laws of any jurisdiction within the United States, provided
that such advice and counseling is not provided to
[[Page 35817]]
facilitate transactions in violation of this part;
(2) Representation of the Government of Sudan or a person in Sudan
when named as a defendant in or otherwise made a party to domestic U.S.
legal, arbitration, or administrative proceedings;
(3) Initiation of domestic U.S. legal, arbitration, or
administrative proceedings in defense of property interests subject to
U.S. jurisdiction of the Government of Sudan, or of a person in Sudan;
(4) Representation of the Government of Sudan or a person in Sudan
before any federal agency with respect to the imposition,
administration, or enforcement of U.S. sanctions against Sudan; and
(5) Provision of legal services in any other context in which
prevailing U.S. law requires access to legal counsel at public expense.
(c) Enforcement of any lien, judgment, arbitral award, decree, or
other order through execution, garnishment or other judicial process
purporting to transfer or otherwise alter or affect a property interest
of the Government of Sudan is prohibited unless specifically licensed
in accordance with Sec. 538.202(e).
Sec. 538.506 30-day delayed effective date for pre-November 4, 1997
trade contracts involving Sudan.
(a) Pre-existing trade contracts. Trade transactions required under
a contract entered into prior to November 4, 1997 (a ``pre-existing
trade contract''), otherwise prohibited by this part, including the
importation of goods or services of Sudanese origin or the exportation
of goods, services, or technology that was authorized under applicable
Federal regulations in force immediately prior to November 4, 1997, are
authorized without specific licensing by the Office of Foreign Assets
Control as follows:
(1) Exports or reexports are authorized until 12:01 a.m. EST,
December 4, 1997, and non-financing activity by U.S. persons incidental
to the performance of the pre-existing trade contract (such as the
provision of transportation or insurance) is authorized through 12:01
a.m. EST, February 2, 1998, if the pre-existing trade contract is for:
(i) The exportation of goods, services, or technology from the
United States or a third country that was authorized under applicable
Federal regulations in force immediately prior to November 4, 1997; or
(ii) The reexportation of goods or technology that was authorized
under applicable Federal regulations in force immediately prior to
November 4, 1997.
(2) If the pre-existing trade contract is for the importation of
goods or services of Sudanese origin or other trade transactions
relating to goods or services of Sudanese origin or owned or controlled
by the Government of Sudan, importations under the pre-existing trade
contract are authorized until 12:01 a.m. EST, December 4, 1997.
(3) For purposes of this section, goods are considered to be
exported upon final loading aboard the exporting conveyance in the
country of export. Goods are considered to be imported upon arrival in
the jurisdiction of the country of importation.
(b)(1) Financing for pre-existing trade contracts. In general, no
financing services prohibited by this part may be performed after 12:01
a.m. EST, November 4, 1997. However, letters of credit and other
financing agreements with respect to the trade transactions authorized
in paragraph (a) of this section may be performed according to their
terms, and may be extended or renewed, except that:
(i) Any payment required to be made to the Government of Sudan or
any person blocked pursuant to this part or otherwise, including
payments authorized with respect to trade transactions described in
paragraph (a) of this section, must be made into a blocked account in
the United States; and
(ii) No payment may be made from a blocked account unless
authorized by a specific license issued by the Office of Foreign Assets
Controls.
(2) Specific licenses may be issued by the Office of Foreign Asset
Controls on a case-by-case basis to permit a U.S. bank to debit a
blocked account of the Government of Sudan for funds held as collateral
under an irrevocable letter of credit issued or confirmed by it, or a
letter of credit reimbursement confirmed by it, for goods, services or
technology exported, or goods or technology reexported, prior to 12:01
a.m. EST, December 4, 1997, directly or indirectly to Sudan, or to
third countries for an entity operated from Sudan, or for the benefit
of the Government of Sudan. The application for a license must:
(i) Present evidence satisfactory to the Office of Foreign Asset
Controls that the exportation or reexportation occurred prior to 12:01
a.m. EST, December 4, 1997; and
(ii) Include an explanation of the facts and circumstances
surrounding the entry and execution of the export or reexport
transaction, including the names and addresses of all Sudanese
participants in the transaction and all Sudanese persons having an
ownership interest in the beneficiary of the letter of credit.
(c) Blocked Government of Sudan accounts. Nothing in this section
permits debits to a blocked account of the Government of Sudan absent
the issuance of a specific license by Office of Foreign Asset Controls
authorizing such a debit. The operation of an account of the Government
of Sudan in a financial institution does not constitute a trade
transaction for purposes of this section.
(d) Existence of contract. The existence of a contract will be
determined with reference to the principles contained in Article 2 of
the Uniform Commercial Code.
(e) Reporting requirement. Although a specific license from Office
of Foreign Asset Controls is not required for any transaction
authorized in paragraph (a) of this section, any U.S. person engaging
in a transaction described in paragraph (a) of this section is required
to report such transaction immediately to the Office of Foreign Asset
Controls and provide a description of the underlying trade contract.
Such reports should be directed to the Office of Foreign Assets
Control, Attn: Compliance Programs Division/Sudan Contracts, 1500
Pennsylvania Avenue, NW, Annex - 2nd Floor, Washington, DC 20220. Such
reports may be made by facsimile transmission to 202/622-1657.
(f) Licensing and reporting provisions. For provisions relating to
applications to the Office of Foreign Asset Controls for specific
licenses and reporting requirements, see Secs. 501.606 and 501.808 of
this chapter.
Sec. 538.507 Reexports by non-U.S. persons.
(a) Goods, technology and services subject to export license
application requirements under other United States regulations. The
reexportation to Sudan or the Government of Sudan by a non-U.S. person
of any goods, technology or services exported from the United States,
the exportation of which to Sudan is subject to export or reexport
license application requirements is authorized under this section
provided that, for reexportation of goods, the goods:
(1) Have been incorporated into another product outside the United
States and constitute 10 per cent or less by value of that product
exported from a third country; or
(2) Have been substantially transformed outside the United States.
Note to paragraph (a) of Sec. 538.507: Goods, technology and
software of U.S. origin that are subject to the Export
Administration Regulations (15 CFR parts 730-774) may require
specific authorization from the
[[Page 35818]]
Department of Commerce, Bureau of Export Administration, even though
such goods have been substantially transformed abroad.
(b) Goods, technology and services not subject to export license
application requirements under other United States regulations. The
reexportation to Sudan or the Government of Sudan by a non-U.S. person
of any goods, technology or services of U.S. origin, the exportation of
which to Sudan is not subject to any export license application
requirements under any other United States regulations, is authorized
under this section. However, the reexportation by non-U.S. persons of
U.S.-origin goods, technology or software classified as EAR99 under the
Export Administration Regulations (15 CFR parts 730-774) may require
specific authorization from the Department of Commerce, Bureau of
Export Administration.
Sec. 538.508 Certain payments by the Government of Sudan of
obligations to persons within the United States authorized.
Specific licenses may be issued on a case-by-case basis to permit
the transfer of funds after the effective date by, through, or to any
U.S. financial institution or other U.S. person not blocked pursuant to
this chapter, from a non-blocked account outside of the United States,
solely for the purpose of payment of obligations of the Government of
Sudan to persons or accounts within the United States, provided that
the obligation arose prior to the effective date, and the payment
requires no debit to a blocked account.
Sec. 538.509 Certain services relating to participation in various
events authorized.
The importation of Sudanese-origin services into the United States
is authorized where such services are performed in the United States by
a Sudanese national who enters the United States on a visa issued by
the State Department for the purpose of participating in a public
conference, performance, exhibition or similar event, and such services
are consistent with that purpose.
Sec. 538.510 Importation and exportation of certain gifts authorized.
The importation into the United States of Sudanese-origin goods,
and the exportation from the United States of goods, is authorized for
goods sent as gifts to persons provided that the value of the gift is
not more than $100; the goods are of a type and in quantities normally
given as gifts between individuals; and the goods are not controlled
for chemical and biological weapons (CB), missile technology (MT),
national security (NS), or nuclear proliferation (NP)(see Commerce
Control List, 15 CFR part 774 of the Export Administration
Regulations).
Sec. 538.511 Accompanied baggage authorized.
(a) Persons entering the United States directly or indirectly from
Sudan are authorized to import into the United States Sudanese-origin
accompanied baggage normally incident to travel.
(b) Persons leaving the United States for Sudan are authorized to
export from the United States accompanied baggage normally incident to
travel.
(c) For purposes of this section, the term accompanied baggage
normally incident to travel includes only baggage that:
(1) Accompanies the traveler on the same aircraft, train, or
vehicle;
(2) Includes only articles that are necessary for personal use
incident to travel, are not intended for any other person or for sale,
and are not otherwise prohibited from importation or exportation under
applicable United States laws.
Sec. 538.512 Transactions related to telecommunications authorized.
All transactions with respect to the receipt and transmission of
telecommunications involving Sudan are authorized. This section does
not authorize the provision to the Government of Sudan or a person in
Sudan of telecommunications equipment or technology.
Sec. 538.513 Transactions related to mail authorized.
All transactions by U.S. persons, including payment and transfers
to common carriers, incident to the receipt or transmission of mail
between the United States and Sudan are authorized, provided that mail
is limited to personal communications not involving a transfer of
anything of value.
Sec. 538.514 Certain transactions related to patents, trademarks and
copyrights authorized.
(a) All of the following transactions in connection with patent,
trademark, copyright or other intellectual property protection in the
United States or Sudan are authorized:
(1) The filing and prosecution of any application to obtain a
patent, trademark, copyright or other form of intellectual property
protection;
(2) The receipt of a patent, trademark, copyright or other form of
intellectual property protection;
(3) The renewal or maintenance of a patent, trademark, copyright or
other form of intellectual property protection; and
(4) The filing and prosecution of opposition or infringement
proceedings with respect to a patent, trademark, copyright or other
form of intellectual property protection, or the entrance of a defense
to any such proceedings.
(b) This section authorizes the payment of fees currently due to
the United States Government, or of the reasonable and customary fees
and charges currently due to attorneys or representatives within the
United States, in connection with the transactions authorized in
paragraph (a) of this section. Payment effected pursuant to the terms
of this paragraph may not be made from a blocked account.
(c) This section authorizes the payment of fees currently due to
the Government of Sudan, or of the reasonable and customary fees and
charges currently due to attorneys or representatives within Sudan, in
connection with the transactions authorized in paragraph (a) of this
section.
(d) Nothing in this section affects obligations under any other
provision of law.
Sec. 538.515 Certain imports for diplomatic or official personnel
authorized.
All transactions ordinarily incident to the importation of any
goods or services into the United States destined for official or
personal use by the diplomatic missions of the Government of Sudan to
the United States and to international organizations located in the
United States are authorized, provided that such goods or services are
not for resale, and unless such importation is otherwise prohibited by
law.
Sec. 538.516 Diplomatic pouches.
All transactions in connection with the importation into the United
States from Sudan, or the exportation from the United States to Sudan,
of diplomatic pouches and their contents are authorized.
Sec. 538.517 Allowable payments for overflights of Sudanese airspace.
Payments to Sudan of charges for services rendered by the
Government of Sudan in connection with the overflight of Sudan or
emergency landing in Sudan of aircraft owned by a United States person
or registered in the United States are authorized.
Sec. 538.518 Household goods and personal effects.
(a) The exportation from the United States to Sudan of household
and personal effects, including baggage and articles for family use, of
persons
[[Page 35819]]
departing the United States to relocate in Sudan is authorized provided
the articles included in such effects have been actually used by such
persons or by family members accompanying them, are not intended for
any other person or for sale, and are not otherwise prohibited from
exportation.
(b) The importation of Sudanese-origin household and personal
effects, including baggage and articles for family use, of persons
arriving in the United States is authorized; to qualify, articles
included in such effects must have been actually used abroad by such
persons or by other family members arriving from the same foreign
household, must not be intended for any other person or for sale, and
must not be otherwise prohibited from importation.
Sec. 538.519 Aircraft and maritime safety.
Specific licenses may be issued on a case-by-case basis for the
exportation and reexportation of goods, services, and technology to
insure the safety of civil aviation and safe operation of U.S.-origin
commercial passenger aircraft, and to ensure the safety of ocean-going
maritime traffic in international waters.
Sec. 538.520 Extensions or renewals of loans and credits.
(a) Specific licenses may be issued on a case-by-case basis for
rescheduling loans or otherwise extending the maturities of existing
loans, and for charging fees or interest at commercially reasonable
rates in connection therewith, provided that no new funds or credits
are thereby transferred or extended to Sudan or the Government of
Sudan.
(b) Specific licenses may be issued on a case-by-case basis, at the
request of the account party, for the extension or renewal of a letter
of credit or a standby letter of credit issued or confirmed by a U.S.
financial institution.
Sec. 538.521 Registration of nongovernmental organizations.
(a) Registration numbers may be issued on a case-by-case basis for
the registration of nongovernmental organizations involved in
humanitarian or religious activities in Sudan, authorizing transactions
otherwise prohibited by this part, including the exportation of goods
and services to Sudan and the transfer of funds to and from Sudan for
the purpose of relieving human suffering.
(b) Applications for registration must include the name and address
of the organization's headquarters; the name, title, and telephone
number of a person to be contacted in connection with registration
pursuant to this section; the organization's local address in Sudan and
name if different; and a detailed description of its humanitarian or
religious activities and projects in Sudan. Applications should be
submitted to the Compliance Programs Division, Office of Foreign Assets
Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW,
Annex, Washington, DC 20220.
(c) Applicants conducting transactions pursuant to this section
should reference the registration number on all funds transfers, and
all purchase, shipping, and financing documents.
Sec. 538.522 Transactions related to U.S. citizens residing in Sudan.
U.S. persons are authorized to engage in transactions in Sudan
ordinarily incident to the routine and necessary maintenance and other
personal living expenses of U.S. citizens who reside on a permanent
basis in Sudan.
Subpart F--Reports
Sec. 538.601 Records and reports.
For additional provisions relating to records and reports, see
subpart C of part 501 of this chapter.
Subpart G--Penalties
Sec. 538.701 Penalties.
(a) Attention is directed to section 206 of the International
Emergency Economic Powers Act (the ``Act'')(50 U.S.C. 1705), 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 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 statement or
representation 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 five years, or both.
(d) Violations of this part may also be subject to relevant
provisions of other applicable laws.
Sec. 538.702 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
[[Page 35820]]
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 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. 538.801 Procedures.
For license application procedures and procedures relating to
amendments, modifications, or revocations of licenses; administrative
decisions; rulemaking; and requests for documents pursuant to the
Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see
subpart D of part 501 of this chapter.
Sec. 538.802 Delegation by the Secretary of the Treasury.
Any action which the Secretary of the Treasury is authorized to
take pursuant to Executive Order 13067 (3 CFR, 1997 Comp., p. 230), and
any further Executive orders relating to the national emergency
declared with respect to Sudan in Executive Order 13067, 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. 538.901 Paperwork Reduction Act notice.
The information collection requirements in Secs. 538.506 and
538.521 have been approved by the Office of Management and Budget
(``OMB'') and assigned control number 1505-0169. For approval by OMB
under the Paperwork Reduction Act of other information collections
relating to recordkeeping and reporting requirements, to licensing
procedures (including those pursuant to statements of licensing
policy), and to other procedures, see Sec. 501.901 of this chapter. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a valid
control number assigned by OMB.
Dated: June 18, 1998.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: June 25, 1998.
James E. Johnson,
Assistant Secretary (Enforcement), Department of the Treasury.
[FR Doc. 98-17538 Filed 6-29-98; 8:51 am]
BILLING CODE 4810-25-F
