[Federal Register Volume 63, Number 197 (Tuesday, October 13, 1998)]
[Rules and Regulations]
[Pages 54575-54585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27339]
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DEPARTMENT OF TRANSPORTATION
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 586
Federal Republic of Yugoslavia (Serbia and Montenegro) Kosovo
Sanctions Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of
the Treasury is issuing the Federal Republic of Yugoslavia (Serbia and
Montenegro) Kosovo Sanctions Regulations to implement Executive Order
13088 of June 9, 1998, ``Blocking Property of the Governments of the
Federal Republic of Yugoslavia (Serbia and Montenegro), the Republic of
Serbia, and the Republic of Montenegro, and Prohibiting New Investment
in the Republic of Serbia in Response to the Situation in Kosovo.''
EFFECTIVE DATE: October 13, 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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is also accessible for downloading in ASCII format without charge from
Treasury's Electronic Library (``TEL'') in the ``Research 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). 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.treas.gov/ofac, 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 June 9, 1998, the President issued Executive Order 13088 (the
``Order''), effective at 12:01 a.m. EDT on June 10, 1998, declaring a
national emergency to deal with the threat posed to the national
security and foreign policy of the United States by the actions and
policies of the Governments of the Federal Republic of Yugoslavia
(Serbia and Montenegro) and the Republic of Serbia with respect to
Kosovo, invoking the authority, inter alia, of the International
Emergency Economic Powers Act (50 U.S.C. 1701-1706). The Order
authorizes the Secretary of the Treasury, in consultation with the
Secretary of State, to take such actions,
[[Page 54576]]
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 Federal Republic of
Yugoslavia (Serbia and Montenegro) Kosovo Sanctions Regulations, 31 CFR
part 586 (the ``Regulations'').
Section 586.201 of the Regulations implements sections 1 and 2 of
the Order, blocking all property and interests in property of the
Governments of the Federal Republic of Yugoslavia (Serbia and
Montenegro), the Republic of Serbia, and the Republic of Montenegro
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 United States persons, including their overseas branches. In keeping
with the Order, this section also specifies that the blocking of
property and property interests includes the prohibition of financial
transactions with, including trade financing for, the Governments of
the Federal Republic of Yugoslavia (Serbia and Montenegro), the
Republic of Serbia, and the Republic of Montenegro by United States
persons. Section 586.201 also encompasses the exemption contained in
section 2 of the Order, which excludes from blocking financial
transactions, including trade financing, by United States persons
within the territory of the Federal Republic of Yugoslavia (Serbia and
Montenegro) if (a) conducted exclusively through the domestic banking
system within the Federal Republic of Yugoslavia (Serbia and
Montenegro) in local currency (dinars), or (b) conducted using bank
notes or barter. This exemption is further described in Sec. 586.408
and expanded by the general license contained in Sec. 586.513.
Section 7 of the Order provides that special consideration shall be
given to the circumstances of the Government of the Republic of
Montenegro and persons located in and organized under the laws of that
Republic in the implementation of the Order. On June 18, 1998, OFAC
issued General License No. 1, authorizing all transactions by U.S.
persons involving property or interests in property of the Government
of the Republic of Montenegro, except as provided pursuant to the
Federal Republic of Yugoslavia (Serbia and Montenegro) and Bosnian
Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
Sanctions Regulations, 31 CFR part 585. This general license is
implemented in Sec. 586.516 of the Regulations.
Section 586.204 of the Regulations implements section 3 of the
Order and prohibits all new investment in the territory of the Republic
of Serbia by U.S. persons, and the approval or other facilitation by
U.S. persons of other persons' new investment in the territory of the
Republic of Serbia. The term ``new investment,'' defined in section
5(c) of the Order and Sec. 586.312 of the Regulations, means (i) the
acquisition of debt or equity interests in, (ii) a commitment or
contribution of funds or other assets to, or (iii) a loan or other
extension of credit to, a public or private undertaking, entity, or
project, other than donations of funds for purely humanitarian purposes
to charitable organizations.
Section 586.205 of the Regulations implements section 4 of the
Order and prohibits any transaction by a U.S. person that evades or
avoids, or that has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in the Order.
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 public participation, and delay in
effective date are inapplicable. Because no notice of proposed
rulemaking is required for this rule, the Regulatory Flexibility Act (5
U.S.C. 601-612) does not apply.
Paperwork Reduction Act
As authorized in the APA, the Regulations are being issued without
prior notice and public comment procedure. Collections of information
related to the Regulations are contained in 31 CFR part 501 (the
``Reporting and Procedures Regulations''). Pursuant to the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507), those collections of
information have been approved by OMB under control number 1505-0164.
An adjustment to the approved burden hours to reflect the additional
burden imposed in administering the Regulations has been filed with
OMB. An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collection of
information displays a valid control number.
List of Subjects in 31 CFR Part 586
Administrative practice and procedure, Banks, banking, Blocking of
assets, Federal Republic of Yugoslavia (Serbia & Montenegro),
Investments, Kosovo, Montenegro, Penalties, New investment, Reporting
and recordkeeping requirements, Serbia.
For the reasons set forth in the preamble, 31 CFR part 586 is added
to read as follows:
PART 586--FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA & MONTENEGRO)
KOSOVO SANCTIONS REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
586.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
586.201 Prohibited transactions involving blocked property.
586.202 Effect of transfers violating the provisions of this part.
586.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
586.204 Prohibited new investment within Serbia.
586.205 Evasions; attempts; conspiracies.
586.206 Exempt transactions.
Subpart C--General Definitions
586.301 Blocked account; blocked property.
586.302 Effective date.
586.303 Entity.
586.304 Federal Republic of Yugoslavia (Serbia & Montenegro); FRY
(S&M).
586.305 General license.
586.306 Government of the Federal Republic of Yugoslavia (Serbia and
Montenegro).
586.307 Government of the Republic of Montenegro.
586.308 Government of the Republic of Serbia.
586.309 Information and informational materials.
586.310 Interest.
586.311 License.
586.312 New investment.
586.313 Person.
586.314 Property; property interest.
586.315 Specific license.
586.316 Transfer.
586.317 U.S. financial institution.
586.318 United States.
586.319 United States person; U.S. person.
Subpart D--Interpretations
586.401 Reference to amended sections.
586.402 Effect of amendment.
586.403 Termination and acquisition of an interest in blocked
property.
586.404 Setoffs prohibited.
586.405 Transactions incidental to a licensed transaction.
586.406 Provision of services.
586.407 Offshore transactions.
[[Page 54577]]
586.408 Exempt financial transactions within the territory of the
FRY (S&M); prohibition on establishment of new offices in Serbia.
586.409 Approval or other facilitation of other persons' investment
in the territory of the Republic of Serbia.
586.410 Transfer of funds to the benefit of certain persons in the
territory of the FRY (S&M).
Subpart E--Licenses, Authorizations and Statements of Licensing Policy
586.501 General and specific licensing procedures.
586.502 Effect of license or authorization.
586.503 Exclusion from licenses and authorizations.
586.504 Payments and transfers to blocked accounts in U.S. financial
institutions.
586.505 Payment of obligations to U.S. persons authorized.
586.506 Investment and reinvestment of certain funds.
586.507 Completion of certain transactions related to bankers
acceptances authorized.
586.508 Entries in certain accounts for normal service charges
authorized.
586.509 Provision of certain legal services authorized.
586.510 Transactions related to telecommunications authorized.
586.511 Transactions related to mail authorized.
586.512 Transactions related to patents, trademarks and copyrights
authorized.
586.513 Certain transactions with respect to trade with blocked
persons authorized.
586.514 Divestiture of U.S. person's equity investment in the
territory of the Republic of Serbia.
586.515 Payments for services rendered by the Government of the FRY
(S&M) to aircraft authorized; aircraft and maritime safety.
586.516 Transactions with respect to property in which the
Government of Montenegro has an interest authorized.
Subpart F--Reports
586.601 Records and reports.
Subpart G--Penalties
586.701 Penalties.
586.702 Prepenalty notice.
586.703 Response to prepenalty notice; informal settlement.
586.704 Penalty imposition or withdrawal.
586.705 Administrative collection; referral to United States
Department of Justice.
Subpart H--Procedures
586.801 Procedures.
586.802 Delegation by the Secretary of the Treasury.
Subpart I--Paperwork Reduction Act
586.901 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1641,
1701-1706; E.O. 13088, 63 FR 32109 (June 12, 1998).
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 586.101 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. Actions pursuant to part
501 of this chapter with respect to the prohibitions of this part are
considered actions pursuant 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. 586.201 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 Governments of the FRY (S&M), the Republic of
Serbia, and the Republic of Montenegro, 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) The blocking of property and property interests in paragraph
(a) of this section includes the prohibition of financial transactions
with, including trade financing for, the Governments of the FRY (S&M),
the Republic of Serbia, and the Republic of Montenegro by United States
persons.
(c) Nothing in this section shall prohibit financial transactions,
including trade financing, by United States persons within the
territory of the FRY (S&M) if conducted exclusively through the
domestic banking system within the FRY (S&M) in local currency
(dinars), or conducted using bank notes or barter.
Note to paragraph (c) of Sec. 586.201: See Secs. 586.408 and
586.513.
(d) 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 Governments of the FRY (S&M), the Republic of Serbia, and the
Republic of Montenegro, 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.
(e) 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.
Note to Sec. 586.201: On June 18, 1998, the Office of Foreign
Assets Control issued General License No. 1, now contained in
Sec. 586.516, authorizing all transactions by U.S. persons involving
property or interests in property of the Government of the Republic
of Montenegro, except with respect to property that continues to be
blocked pursuant to the Federal Republic of Yugoslavia (Serbia and
Montenegro) and Bosnian Serb-Controlled Areas of the Republic of
Bosnia and Herzegovina Sanctions Regulations, 31 CFR part 585 (see
Sec. 585.525). In addition, as set forth in Sec. 586.502 (d), any
transaction authorized with respect to the Government of the FRY
(S&M) pursuant to this part is also authorized with respect to the
Governments of the Republic of Serbia and the Republic of
Montenegro, unless otherwise specified.
Sec. 586.202 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 issued pursuant to
this part and involves any property or interest in property blocked
pursuant to Sec. 586.201 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,
[[Page 54578]]
power, or privilege with respect to, or interest in, any property or
interest in property blocked pursuant to Sec. 586.201, 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 pursuant to this part.
(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 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 issued pursuant to this part; 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) of Sec. 586.202: 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. 586.201.
Sec. 586.203 Holding of funds in interest-bearing accounts; investment
and reinvestment.
(a) Except as provided in paragraph (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. 586.201 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. 586.201 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. 586.201 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. 586.201. 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 persons whose property or interests in property
are blocked pursuant to Sec. 586.201, nor may their holder cooperate in
or facilitate the pledging or other attempted use as collateral of
blocked funds or other assets.
Sec. 586.204 Prohibited new investment within Serbia.
Except as otherwise provided in regulations, orders, directives, or
licenses that may hereafter be issued pursuant to this order, all new
investment in the territory of the Republic of Serbia by United States
persons, and the approval or other facilitation by United States
persons of other persons' new investment in the territory of the
Republic of Serbia, are prohibited.
Sec. 586.205 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. 586.206 Exempt transactions.
(a) Personal communications. The prohibitions contained in this
part do not apply to any postal, telegraphic, telephonic, or other
personal 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. 586.309, 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
[[Page 54579]]
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, but are not limited to, payment of advances for
information and informational materials not yet created and completed
(with the exception of prepaid subscriptions for widely circulated
magazines and other periodical publications), 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
persons whose property or interests in property are blocked pursuant to
Sec. 586.201 with respect to income received for enhancements or
alterations made by U.S. persons to information or informational
materials imported from persons whose property and property interests
are blocked pursuant to Sec. 586.201.
(3) This section does not exempt or 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, or to the sale or leasing of telecommunications
transmission facilities (such as satellite links or dedicated lines)
for use in the transmission of any data. The exportation of such items
or services and the sale or leasing of such facilities to a person
whose property and interests in property are blocked pursuant to
Sec. 586.201 is prohibited.
(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) Journalistic activity. The prohibitions contained in this part
do not apply to transactions in the FRY (S&M) for journalistic activity
by persons regularly employed in such capacity by a news-gathering
organization.
(e) Humanitarian donations. The prohibitions of this part do not
apply to donations by U.S. persons of articles, such as food, clothing,
and medicine, intended to be used to relieve human suffering.
Subpart C--General Definitions
Sec. 586.301 Blocked account; blocked property.
The terms blocked account and blocked property shall mean any
account or property subject to the prohibition in Sec. 586.201 held in
the name of a person whose property is blocked pursuant to Sec. 586.201
or in which such person 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.
Sec. 586.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part which is
12:01 a.m. EDT, June 10, 1998.
Sec. 586.303 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, or other organization.
Sec. 586.304 Federal Republic of Yugoslavia (Serbia & Montenegro); FRY
(S&M).
The term Federal Republic of Yugoslavia (Serbia & Montenegro) or
FRY (S&M) means the territory of the Republics of Serbia and
Montenegro.
Sec. 586.305 General license.
The term general license means any license or authorization the
terms of which are set forth in this part.
Sec. 586.306 Government of the Federal Republic of Yugoslavia (Serbia
and Montenegro).
The term Government of the Federal Republic of Yugoslavia (Serbia
and Montenegro) means the government of the FRY (S&M), its agencies,
instrumentalities, and controlled entities, including all financial
institutions and state-owned and socially-owned entities organized or
located in the FRY (S&M) as of June 9, 1998, any successors to such
entities, and their respective subsidiaries and branches, wherever
located, and any persons acting or purporting to act for or on behalf
of any of the foregoing.
Note to Sec. 586.306: 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
designations, or who wish to assert that the circumstances resulting
in designation are no longer applicable.
Sec. 586.307 Government of the Republic of Montenegro.
The term Government of the Republic of Montenegro means the
government of the Republic of Montenegro, including any subdivisions
thereof or local governments therein, its agencies, instrumentalities
and controlled entities, including all financial institutions and
state-owned and socially-owned entities organized or located in the
Republic of Montenegro as of June 9, 1998, any successors to such
entities, and their respective subsidiaries and branches, wherever
located, and any persons acting or purporting to act for or on behalf
of any of the foregoing.
Note to Sec. 586.307: Section 586.516 authorizes all
transactions by U.S. persons involving property or interests in
property of the Government of the Republic of Montenegro, unless
such property remains blocked pursuant to the Federal Republic of
Yugoslavia (Serbia and Montenegro) and Bosnian Serb-Controlled Areas
of the Republic of Bosnia and Herzegovina Sanctions Regulations, 31
CFR part 585 (see Sec. 585.525).
Sec. 586.308 Government of the Republic of Serbia.
The term Government of the Republic of Serbia means the government
of the Republic of Serbia, including any subdivisions thereof or local
governments therein, its agencies, instrumentalities, and controlled
entities, including all financial institutions and state-owned and
socially-owned entities organized or located in the Republic of Serbia
as of June 9, 1998, any successors to such entities, and their
respective subsidiaries and branches, wherever located, and any persons
acting or purporting to act for or on behalf of any of the foregoing.
Note to Sec. 586.308: 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
designations, or who wish to assert that the circumstances resulting
in designation are no longer applicable.
Sec. 586.309 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.
[[Page 54580]]
(2) To be considered informational materials, artworks must be
classified under chapter heading 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. 586.310 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. 586.311 License.
Except as otherwise specified, the term license means any license
or authorization contained in or issued pursuant to this part.
Sec. 586.312 New investment.
The term new investment means the acquisition of debt or equity
interests in, a commitment or contribution of funds or other assets to,
or a loan or other extension of credit to, a public or private
undertaking, entity, or project, including the Government of the
Republic of Serbia, other than donations of funds to charitable
organizations for purely humanitarian purposes.
Sec. 586.313 Person.
The term person means an individual or entity.
Sec. 586.314 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, 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. 586.315 Specific license.
The term specific license means any license or authorization not
set forth in this part but issued pursuant to this part.
Sec. 586.316 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. 586.317 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.
Sec. 586.318 United States.
The term United States means the United States, its territories and
possessions, and all areas under the jurisdiction or authority thereof.
Sec. 586.319 United States person; U.S. person.
The term United States person or U.S. person means any U.S.
citizen, permanent resident alien, entity organized under the laws of
the United States (including foreign branches), or any person in the
United States.
Subpart D--Interpretations
Sec. 586.401 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 refers to the same as currently
amended.
Sec. 586.402 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 does 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. 586.403 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
[[Page 54581]]
from a person whose property or interests in property are blocked
pursuant to Sec. 586.201, such property shall no longer be deemed to be
property blocked pursuant to Sec. 586.201, unless there exists in the
property another interest that is blocked pursuant to Sec. 586.201 or
any other part of this chapter, 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 a
person whose property or interests in property are blocked pursuant to
Sec. 586.201, such property shall be deemed to be property in which
that person has an interest and therefore blocked.
Sec. 586.404 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. 586.201 if effected after the effective date.
Sec. 586.405 Transactions incidental to a licensed transaction.
Any transaction ordinarily incident to a licensed transaction and
necessary to give effect thereto is also authorized, except an
unlicensed transaction by a person whose property or interests in
property are blocked pursuant to Sec. 586.201, or involving an
unlicensed debit to a blocked account or transfer of blocked property
not explicitly authorized within the terms of the license.
Sec. 586.406 Provision of services.
(a) Except as provided in Sec. 586.201(c) or as otherwise
authorized, the prohibitions contained in Sec. 586.201 apply to
services performed by U.S. persons, wherever located:
(1) On behalf of, or for the benefit of, a person whose property or
interests in property are blocked pursuant to Sec. 586.201; or
(2) With respect to property interests of a person whose property
or interests in property are blocked pursuant to Sec. 586.201.
(b) 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 persons whose
property or interests in property are blocked pursuant to Sec. 586.201.
See Sec. 586.509 on licensing policy with regard to the provision of
certain legal services.
Sec. 586.407 Offshore transactions.
(a) The prohibitions contained in Sec. 586.201 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, that a person whose property and interests in property are
blocked pursuant to Sec. 586.201 has or has had an interest since the
effective date.
(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 in which the U.S. person knows, or has reason to know, that a
person whose property and interests in property are blocked pursuant to
Sec. 586.201 has or has had an interest since the effective date.
(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, furniture, shoes or
other goods manufactured by a state or socially-owned entity organized
or located in the FRY (S&M).
(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 a state or socially-owned
entity within the territory of the FRY (S&M), or which benefits or
supports the business of such an entity, 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.
Note to Sec. 586.407: See Sec. 586.513 with regard to the
authorization of certain trade-related transactions.
Sec. 586.408 Exempt financial transactions within the territory of the
FRY (S&M); prohibition on establishment of new offices in Serbia.
(a) Section 586.201(c) exempts financial transactions, including
trade financing, from the prohibitions contained in Sec. 586.201 by
U.S. persons physically located within the territory of the FRY (S&M),
where those transactions are conducted exclusively through the domestic
banking system within the FRY (S&M) in local currency (dinars), or
using bank notes or barter. A U.S. entity must have a permanent
establishment, such as a branch or representative office, within the
territory of the FRY (S&M) to be considered physically located there
for purposes of this paragraph (a).
(b) The prohibition on new investment within Serbia contained in
Sec. 586.204, as defined in Sec. 586.312, precludes the establishment
after the effective date of a new representative or branch office or
joint venture or other entity within the territory of the Republic of
Serbia, because such activity would necessarily involve a commitment or
contribution of funds or other assets to a public or private
undertaking, entity, or project within Serbia. See Sec. 586.513
concerning the authorization of certain trade-related transactions
conducted using bank notes or barter by U.S. persons located outside of
the territory of the FRY (S&M).
Note to Sec. 586.408: All transactions with respect to property
in which the Government of the Republic of Montenegro has an
interest are authorized pursuant to Sec. 586.516. Therefore, all
financial transactions by U.S. persons within the territory of the
Republic of Montenegro are authorized, unless the transaction
involves property in which another interest exists that is blocked
pursuant to Sec. 586.201 or any other part of this chapter. See
Sec. 586.403.
Sec. 586.409 Approval or other facilitation of other persons'
investment in the territory of the Republic of Serbia.
(a) The prohibition contained in Sec. 586.204 against approval or
other facilitation by U.S. persons of other persons' investment in the
territory of the Republic of Serbia bars any action by a U.S. person
that assists or supports other persons' activity that would constitute
prohibited new investment under that section if engaged in by a U.S.
person. Such approval or other facilitation with respect to persons
whose property or interests in property are blocked pursuant to
Sec. 586.201 also constitutes a violation of that section. See the
definition of the term new investment in Sec. 586.312.
(b) Examples: (1) A U.S. person is prohibited from brokering,
financing, guaranteeing, or approving the purchase by any other person,
including a foreign affiliate, of shares, including an equity interest,
in a publicly or privately held undertaking, entity or project located
in the territory of the Republic of Serbia, except as provided in
Sec. 586.514.
(2) The sale to a non-U.S. person of a U.S. person's equity or
income interest in an entity in the territory of the Republic of Serbia
constitutes facilitation of that other person's investment in Serbia,
and would otherwise be prohibited but for the authorization contained
in Sec. 586.514.
(3) A U.S. national or permanent resident alien employed by a
foreign person may not participate in any
[[Page 54582]]
decision-making role in an activity by the foreign person that includes
investment in the territory of the Republic of Serbia.
Sec. 586.410 Transfer of funds to the benefit of certain persons in
the territory of the FRY (S&M).
Section 586.201 does not prohibit U.S. financial institutions that
are not blocked, including their foreign branches, from transferring
funds to accounts in financial institutions for the benefit of
individuals, non-governmental organizations and other persons located
in the territory of the FRY (S&M) whose property and interests in
property are not blocked pursuant to that section, provided that such
transactions do not result in the transfer of funds to or for the
benefit of persons whose property or interests in property are blocked
pursuant to Sec. 586.201.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
Sec. 586.501 General and specific licensing procedures.
For provisions relating to licensing procedures, see subpart C of
part 501 of this chapter. Licensing actions pursuant to part 501 of
this chapter with respect to the prohibitions of this part are
considered actions pursuant to this part.
Sec. 586.502 Effect of license or authorization.
(a) No license or other authorization contained in this part, or
otherwise issued by or under the direction of the Director of the
Office of Foreign Assets Control pursuant to this part, authorizes or
validates any transaction effected prior to the issuance of the
license, unless specifically so 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 authorizes 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.
Note to paragraph (c) of Sec. 586.502: The general license in
Sec. 586.516 authorizing transactions with respect to property in
which the Government of the Republic of Montenegro has an interest
removes such property and interests in property from the phrase
``property and interests in property blocked pursuant to
Sec. 586.201'' for purposes of this part.
(d) Any general license or statement of licensing policy contained
in this part authorizing transactions with respect to the Government of
the FRY (S&M) shall, unless otherwise stated, also authorize analogous
transactions with respect to the Governments or territories of the
Republic of Serbia and the Republic of Montenegro.
Sec. 586.503 Exclusion from licenses and authorizations.
The Director of the Office of Foreign Assets Control reserves the
right to exclude any person, property, or transaction from the
operation of any license, or from the privileges therein conferred, or
to restrict the applicability thereof with respect to particular
persons, property, transactions, or classes thereof. Such action is
binding upon all persons receiving actual or constructive notice of
such exclusion or restriction.
Sec. 586.504 Payments and transfers to blocked accounts in U.S.
financial institutions.
Any payment of funds or transfer of credit in which any person
whose property and interests in property are blocked pursuant to
Sec. 586.201 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. 586.504: Please refer to Sec. 501.603 of this
chapter for mandatory reporting requirements regarding financial
transfers. See also Sec. 586.203 concerning the obligation to hold
blocked funds in interest-bearing accounts.
Sec. 586.505 Payment of obligations to U.S. persons authorized.
(a) 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 solely for the purpose of payment of
obligations to U.S. persons of persons whose property or interests in
property are blocked pursuant to Sec. 586.201 is authorized, provided
that the obligation arose prior to the effective date or is otherwise
authorized pursuant to statute or the provisions of this part, and the
payment requires no debit to a blocked account. Property is not blocked
by virtue of being transferred or received pursuant to this section.
(b) A person receiving payment under this section may distribute
all or part of that payment to any person, provided that any such
payment to a person whose property or interests in property are blocked
pursuant to Sec. 586.201 must be to a blocked account in a U.S.
financial institution.
Note to Sec. 586.505: Please refer to Sec. 501.603 of this
chapter for mandatory reporting requirements regarding financial
transfers. See also Sec. 586.203 concerning the obligation to hold
blocked funds in interest-bearing accounts.
Sec. 586.506 Investment and reinvestment of certain funds.
U.S. financial institutions are authorized to invest and reinvest
assets blocked pursuant to Sec. 586.201, subject to the following
conditions:
(a) The assets representing such investments and reinvestments are
credited to a blocked account or subaccount which is held in the same
name at the same U.S. financial institution, or within the possession
or control of a U.S. person, but in no case may funds be transferred
outside the United States for this purpose; and
(b) The proceeds of such investments and reinvestments are not
credited to a blocked account or subaccount under any name or
designation which differs from the name or designation of the specific
blocked account or subaccount in which such funds or securities were
held; and
(c) No immediate financial or economic benefit accrues (e.g.,
through pledging or other use) to any person whose property or
interests in property are blocked pursuant to Sec. 586.201.
Sec. 586.507 Completion of certain transactions related to bankers
acceptances authorized.
Persons other than those whose property or interests in property
are blocked pursuant to Sec. 586.201 are authorized to buy, sell, and
satisfy obligations with respect to bankers acceptances, and to pay
under deferred payment undertakings, involving a property interest
blocked pursuant to Sec. 586.201, as long as the bankers
[[Page 54583]]
acceptances were created or the deferred payment undertakings were
incurred prior to the effective date.
Sec. 586.508 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. 586.509 Provision of certain legal services authorized.
(a) The provision to or on behalf of a person whose property or
interests in property are blocked pursuant to Sec. 586.201 of the legal
services set forth in paragraph (b) of this section is authorized,
provided that all receipt of payment therefor must be specifically
licensed.
(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 a person whose property or interests in
property are blocked pursuant to Sec. 586.201:
(1) Provision of legal advice and counseling 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
facilitate transactions that would violate any of the prohibitions
contained in this part;
(2) Representation of a person whose property or interests in
property are blocked pursuant to Sec. 586.201 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 a person whose property or interests in property
are blocked pursuant to Sec. 586.201;
(4) Representation of a person whose property and interests in
property are blocked pursuant to Sec. 586.201 before any federal or
state agency with respect to the imposition, administration, or
enforcement of U.S. sanctions against such person; 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) The provision of any other legal services to a person whose
property or interests in property are blocked pursuant to Sec. 586.201,
not otherwise authorized in or exempted by this part, requires the
issuance of a specific license.
(d) Entry into a settlement agreement affecting property or
interests in property of a person whose property or interests in
property are blocked pursuant to Sec. 586.201 or the 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 such person is
prohibited unless specifically licensed in accordance with
Sec. 586.202(e).
Sec. 586.510 Transactions related to telecommunications authorized.
All transactions with respect to the receipt and transmission of
telecommunications involving the FRY (S&M) are authorized. This section
does not authorize the provision to any person whose property or
interests in property are blocked pursuant to Sec. 586.201 of
telecommunications equipment or technology, nor the sale or leasing of
telecommunications transmission facilities (such as satellite links or
dedicated lines).
Sec. 586.511 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 the FRY (S&M) are authorized, provided
that mail is limited to personal communications not involving a
transfer of anything of value.
Sec. 586.512 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 the FRY (S&M) 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 (b) may not be made from a blocked account.
(c) This section authorizes the payment of fees currently due to
the Government of the FRY (S&M), or of the reasonable and customary
fees and charges currently due to attorneys or representatives within
the territory of the FRY (S&M), 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. 586.513 Certain transactions with respect to trade with blocked
persons authorized.
(a) U.S. persons may trade in goods in which a person whose
property and interests in property are blocked pursuant to Sec. 586.201
has an interest, provided that the payment for the goods is made in
bank notes and coins of any currency or by barter. Any open account
credit terms may not exceed 30 days. Transactions relating to services
incident to this trade in goods, including payment for shipping and
insurance to non-blocked entities, are authorized.
(b) Example: A U.S. company located outside of Serbia may ship
goods to Serbia in exchange for bank notes and coins or under a barter
arrangement in exchange for Serbian goods, exchanged directly with the
U.S. company or assigned to a third company in satisfaction of an
obligation owed that party by the U.S. company. Except as provided in
Sec. 586.408 or otherwise specifically authorized, however, the U.S.
company may not establish or use an account at a financial institution
[[Page 54584]]
within the territory of the Republic of Serbia in connection with any
trade transaction described in this section.
Sec. 586.514 Divestiture of U.S. person's equity investment in the
territory of the Republic of Serbia.
Notwithstanding the prohibition in Sec. 586.204 against the
facilitation by a U.S. person of other persons' new investment in the
territory of the Republic of Serbia, all transactions related to the
divestiture or transfer to a non-U.S. person, other than a person whose
property or property interests are blocked pursuant to Sec. 586.201 or
this chapter, of a U.S. person's investment in the Republic of Serbia
are authorized.
Sec. 586.515 Payments for services rendered by the Government of the
FRY (S&M) to aircraft authorized; aircraft and maritime safety.
(a) Payments to the Government of the FRY (S&M) of charges for
services rendered by that Government in connection with the overflight
of the territory of the FRY (S&M) or emergency landing in the FRY (S&M)
by aircraft are authorized.
(b) 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. 586.516 Transactions with respect to property in which the
Government of the Republic of Montenegro has an interest authorized.
All transactions by U.S. persons involving property or interests in
property in which the Government of the Republic of Montenegro has an
interest are authorized, except with respect to property blocked
pursuant to the Federal Republic of Yugoslavia (Serbia and Montenegro)
and Bosnian Serb-Controlled Areas of the Republic of Bosnia and
Herzegovina Sanctions Regulations, 31 CFR part 585 (see Sec. 585.525).
Property and interests in property of the Government of Montenegro
shall not be considered ``property and interests in property blocked
pursuant to Sec. 586.201'' for purposes of this part. This
authorization does not apply, however, to property in which the
Government of Montenegro has an interest but in which there also exists
an interest of another person whose property or interests in property
are blocked pursuant to Sec. 586.201 or any other part of this chapter.
Subpart F--Reports
Sec. 586.601 Records and reports.
For provisions relating to records and reports, see subpart C of
part 501 of this chapter.
Subpart G--Penalties
Sec. 586.701 Penalties.
(a) Attention is directed to section 206 of the International
Emergency Economic Powers Act (50 U.S.C. 1705) (the ``Act''), which is
applicable to violations of the provisions of any license, ruling,
regulation, order, direction or instruction issued by or pursuant to
the direction or authorization of the Secretary of the Treasury
pursuant to this part or otherwise under the Act. Section 206 of the
Act, as adjusted by the Federal Civil Penalties Inflation Adjustment
Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note),
provides that:
(1) A civil penalty 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. 586.702 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. 586.703 Response to prepenalty notice; informal settlement.
(a) Deadline for response. The respondent shall have 30 days from
the date of mailing of the prepenalty notice to make a written response
to the Director of the Office of Foreign Assets Control.
(b) Form and contents of response. The written response need not be
in any particular form, but shall contain information sufficient to
indicate that it is in response to the prepenalty notice. It should
contain responses to the allegations in the prepenalty notice and set
forth the reasons why the respondent believes the penalty should not be
imposed or, if imposed, why it should be in a lesser amount than
proposed.
(c) Informal settlement. In addition or as an alternative to a
written response to a prepenalty notice pursuant to this section, the
respondent or respondent's representative may contact the Office of
Foreign Assets Control as advised in the prepenalty notice to propose
the settlement of allegations contained in the prepenalty notice and
related matters. In the event of settlement at the prepenalty stage,
the claim proposed in the prepenalty notice will be withdrawn, the
respondent is not required to take a written position on allegations
contained in the prepenalty notice, and the Office of Foreign Assets
Control will make no final determination as to whether a violation
occurred. The amount accepted in settlement of allegations in a
prepenalty
[[Page 54585]]
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. 586.704 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. 586.705 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. 586.801 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. 586.802 Delegation by the Secretary of the Treasury.
Any action which the Secretary of the Treasury is authorized to
take pursuant to Executive Order 13088 (63 FR 32109, June 12, 1998),
and any further Executive orders relating to the national emergency
declared in Executive Order 13088, 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. 586.901 Paperwork Reduction Act notice.
For approval by OMB under the Paperwork Reduction Act of 1995 (44
U.S.C. 3507) of 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: September 18, 1998.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: September 29, 1998.
Elisabeth A. Bresee,
Assistant Secretary (Enforcement), Department of the Treasury.
[FR Doc. 98-27339 Filed 10-7-98; 4:34 pm]
BILLING CODE 4810-25-F
