E-CFR

US Electronic Code of Federal Regulations Reading Aid

Title 31 – Money and Finance: Treasury–Volume 3

Last updated on May 12th, 2022 at 10:15 pm

Contents hide

Title 31 – Money and Finance: Treasury–Volume 3



SUBTITLE B – Regulations Relating to Money and Finance (Continued)

Part


chapter v – Office of Foreign Assets Control, Department of the Treasury

500


chapter vi – Bureau of Engraving and Printing, Department of the Treasury

601


chapter vii – Federal Law Enforcement Training Center, Department of the Treasury

700


chapter viii – Office of Investment Security, Department of the Treasury

800


chapter ix – Federal Claims Collection Standards (Department of the Treasury – Department of Justice)

900


chapter x – Financial Crimes Enforcement Network, Department of the Treasury

1010


Subtitle B – Regulations Relating to Money and Finance (Continued)

CHAPTER V – OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY

PART 500 [RESERVED]

PART 501 – REPORTING, PROCEDURES AND PENALTIES REGULATIONS


Authority:8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C. 3901-3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c, 2370(a), 6009, 6032, 7205, 8501-8551; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706, 4301-4341; Pub. L. 101-410, 104 Stat. 890, as amended (28 U.S.C. 2461 note).



Source:62 FR 45101, Aug. 25, 1997, unless otherwise noted.

Subpart A – Relation of This Part to Other Parts in This Chapter

§ 501.101 Relation of this part to other parts in this chapter.

This part sets forth standard reporting and recordkeeping requirements and license application and other procedures governing transactions regulated pursuant to other parts codified in this chapter, as well as to economic sanctions programs for which implementation and administration are delegated to the Office of Foreign Assets Control. Substantive prohibitions and policies particular to each economic sanctions program are not contained in this part but are set forth in the particular part of this chapter dedicated to that program, or, in the case of economic sanctions programs not yet implemented in regulations, in the applicable executive order or other authority. License application procedures and reporting requirements set forth in this part govern transactions undertaken pursuant to general or specific licenses. The criteria for general and specific licenses pertaining to a particular economic sanctions program are set forth in subpart E of the individual parts in this chapter. Statements of licensing policy contained in subpart E of the individual parts in this chapter, however, may contain additional information collection provisions that require production of specified documentation unique to a given general license or statement of licensing policy.


[62 FR 52494, Oct. 8, 1997]


Subpart B – Definitions

§ 501.301 Definitions.

Definitions of terms used in this part are found in subpart C of the part within this chapter applicable to the relevant application, record, report, procedure or transaction. In the case of economic sanctions programs for which implementation and administration are delegated to the Office of Foreign Assets Control but for which regulations have not yet been issued, the definitions of terms in this part are governed by definitions contained in the implementing statute or Executive order.


Subpart C – Reports

§ 501.601 Records and recordkeeping requirements.

Except as otherwise provided, every person engaging in any transaction subject to the provisions of this chapter shall keep a full and accurate record of each such transaction engaged in, regardless of whether such transaction is effected pursuant to license or otherwise, and such record shall be available for examination for at least 5 years after the date of such transaction. Except as otherwise provided, every person holding property blocked pursuant to the provisions of this chapter or funds transfers retained pursuant to § 596.504(b) of this chapter shall keep a full and accurate record of such property, and such record shall be available for examination for the period of time that such property is blocked and for at least 5 years after the date such property is unblocked.



Note:

See subpart F of part 597 for the relationship between this section and part 597.


[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52494, Oct. 8, 1997]


§ 501.602 Reports to be furnished on demand.

(a) Every person is required to furnish under oath, in the form of reports or otherwise, from time to time and at any time as may be required by the Office of Foreign Assets Control, complete information relative to any act or transaction, regardless of whether such act or transaction is effected pursuant to license or otherwise, subject to the provisions of this chapter or relative to any property in which any foreign country or any national thereof has or had any interest of any nature whatsoever, direct or indirect. The Office of Foreign Assets Control may require that such reports include the production of any books, contracts, letters, papers, or other hard copy or electronic documents relating to any such act, transaction, or property, in the custody or control of the persons required to make such reports. Reports with respect to transactions may be required either before, during, or after such transactions. Except as provided in parts 596 and 597, the Office of Foreign Assets Control may, through any person or agency, conduct investigations, hold hearings, administer oaths, examine witnesses, receive evidence, take depositions, and require by subpoena the attendance and testimony of witnesses and the production of any books, contracts, letters, papers, and other hard copy or electronic documents relating to any matter under investigation, regardless of whether any report has been required or filed in connection therewith.


(b) For purposes of paragraph (a) of this section, the term “document” includes any written, recorded, or graphic matter or other means of preserving thought or expression (including in electronic format), and all tangible things stored in any medium from which information can be processed, transcribed, or obtained directly or indirectly, including correspondence, memoranda, notes, messages, contemporaneous communications such as text and instant messages, letters, emails, spreadsheets, metadata, contracts, bulletins, diaries, chronological data, minutes, books, reports, examinations, charts, ledgers, books of account, invoices, air waybills, bills of lading, worksheets, receipts, printouts, papers, schedules, affidavits, presentations, transcripts, surveys, graphic representations of any kind, drawings, photographs, graphs, video or sound recordings, and motion pictures or other film.


(c) Persons providing documents to OFAC pursuant to this section must produce documents in a usable format agreed upon by OFAC. For guidance, see OFAC’s data delivery standards available on OFAC’s website (http://www.treasury.gov/ofac).



Note 1 to § 501.602:

See subpart F of part 597 for the relationship between this section and part 597.


[84 FR 29058, June 21, 2019]


§ 501.603 Reports on blocked and unblocked property.

(a) Who must report – (1) Holders of blocked property. Any U.S. person (or person subject to U.S. jurisdiction), including a financial institution, holding property blocked pursuant to this chapter or releasing property from blocked status (i.e., unblocking property) pursuant to this chapter shall submit the relevant reports described in this section to the Office of Foreign Assets Control (OFAC). This requirement applies to all U.S. persons (or persons subject to U.S. jurisdiction) who have or have had in their possession or control any property blocked pursuant to this chapter, including financial institutions that receive and block payments or transfers.


(2) Primary responsibility to report. A report may be filed on behalf of a holder of blocked property or a releaser of property from blocked status by an attorney, agent, or other person. Primary responsibility for reporting, however, rests with the actual holder or releaser of the property, or the person exercising control over property located outside the United States, with the following exceptions: Primary responsibility for reporting any trust assets rests with the trustee; and primary responsibility for reporting real property rests with any U.S. co-owner, legal representative, agent, or property manager in the United States. No person is excused from filing a report by reason of the fact that another person has submitted a report with regard to the same property, except upon actual knowledge of the report filed by such other person.


(3) Financial institution. For purposes of this section, the term “financial institution” includes a banking institution, domestic bank, United States depository institution, financial institution, or U.S. financial institution, as those terms are defined in the applicable part of this chapter.


(b) What must be reported – (1) Initial blocking reports – (i) When reports are due. Reports shall be filed within 10 business days from the date that property becomes blocked.


(ii) Required information to be reported. Initial reports on blocked property shall include the following:


(A) The name and address of the person holding the property blocked pursuant to this chapter (i.e., the person filing the report on blocked property, such as a financial institution), and the name, telephone number, and email address of a contact from whom additional information may be obtained;


(B) A description of any transaction associated with the blocking, including: The type of transaction; any persons, including financial institutions, participating in the transaction and their respective locations (e.g., if relevant, customers, beneficiaries, originators, letter of credit applicants, and their banks; intermediary banks; correspondent banks; issuing banks; and advising or confirming banks); and any reference numbers, dates, or other information necessary to identify the transaction;


(C) The associated sanctions target(s) whose property is blocked (such as a Specially Designated National or other blocked person), the location(s) of the target(s) (if known), and, if not evident, a narrative description of the interest(s) of the target(s) in the property; if there is no target or the target is not known, include a reference to the relevant written communication from OFAC pursuant to which the blocking action was taken;


(D) A description of the property that is the subject of the blocking and its location in the United States or otherwise, including any relevant account numbers and account types, check numbers, reference numbers, dates, or other information necessary to identify the property;


(E) The date the property was blocked;


(F) The actual, or if unknown, estimated value of the property in U.S. Dollars. If the blocked property represents an outstanding loan, a credit card receivable, or other property with a negative balance, the amount blocked should be reported as $0.00 (zero) with the amount owed reflected in a narrative description. Blocked trade finance documents should also be reported as $0.00 (zero) with the value of the shipment reflected in a narrative description. Transactions blocked in foreign currencies must be reported in U.S. Dollars with the foreign currency amount and notional exchange rate in the narrative;


(G) The legal authority or authorities under which the property is blocked and any action taken with respect to the property (e.g., that the property has been deposited into a new or existing blocked, interest-bearing account that is labeled as such and is established in the name of, or contains a means of clearly identifying the interest of, the person subject to blocking pursuant to the requirements of this chapter). This may include a reference to the sanctions program (current programs are listed here: www.treasury.gov/resource-center/sanctions/SDN-List/Pages/program_tags.aspx), the applicable part of this chapter (e.g., 31 CFR part 515, 31 CFR part 544), an Executive order (E.O.) (e.g., E.O. 13224, E.O. 13599), or a statute (e.g., Foreign Narcotics Kingpin Designation Act). (Note: For this purpose, the term “SDN” is generic and cannot be used to identify the legal authority for blocking property); and


(H) A copy of any payment or transfer instructions, check, letter of credit, accompanying bill of lading, invoice, or any other relevant documentation received in connection with any related transaction.


(2) Annual reports of blocked property – (i) When reports are due. A report on all blocked property held as of June 30 of the current year shall be filed annually by September 30.


(ii) Required information to be reported. Annual reports on blocked property shall include the following:


(A) The name and address of the person holding the property blocked pursuant to this chapter (i.e., the person filing the report on blocked property, such as a financial institution), and the name, telephone number, and email address of a contact from whom additional information may be obtained;


(B) The number of accounts or items reported in the annual report;


(C) Beginning with the annual report due no later than September 30, 2020, and for each subsequent reporting year, the associated sanctions target(s) whose property is blocked, such as a Specially Designated National or other blocked person, the location(s) of the target(s), if known, and, if not evident, a narrative description of the interest(s) of the target(s) in the transaction; if there is no target or the target is not known, include a reference to the relevant written communication from OFAC pursuant to which the blocking action was taken;


(D) A description of the property that is the subject of the blocking and its location in the United States or otherwise, including any relevant account numbers and account types, check numbers, reference numbers, dates, or other information necessary to identify the property;


(E) The date the property was blocked;


(F) The actual, or if unknown, estimated value of the property in U.S. Dollars as of June 30. If a June 30 value date is not available and a value date other than June 30 is reported, so indicate. If the blocked property represents an outstanding loan, a credit card receivable, or other property with a negative balance, the amount blocked should be reported as $0.00 (zero) with the amount owed reflected in a narrative description. Blocked trade finance documents should also be reported as $0.00 (zero) with the value of the shipment reflected in a narrative description. Transactions blocked in foreign currencies must be reported in U.S. Dollars with the foreign currency amount and notional exchange rate in the narrative; and


(G) The legal authority or authorities under which the property is blocked. This may include a reference to the sanctions program (current programs are listed here: www.treasury.gov/resource-center/sanctions/SDN-List/Pages/program_tags.aspx), the applicable part of this chapter (e.g., 31 CFR part 515, 31 CFR part 544), an Executive order (E.O.) (e.g., E.O. 13224, E.O. 13599), or a statute (e.g., Foreign Narcotics Kingpin Designation Act). (Note: For this purpose, the term “SDN” is generic and cannot be used to identify the legal authority for blocking property).


(iii) Format of annual reports. Annual reports shall be submitted to OFAC either using the most recent version of Form TDF 90-22.50, Annual Report of Blocked Property, or by another official reporting option, including electronic, as specified by OFAC on its website (http://www.treasury.gov/ofac). While blocked funds may be maintained in omnibus accounts, the annual reports must contain a disaggregated list showing each blocked asset contained within the omnibus account. Form TDF 90-22.50 may be obtained directly from OFAC by downloading the form from the OFAC Reporting and License Application Forms page on OFAC’s website (https://www.treasury.gov/resource-center/sanctions/Pages/forms-index.aspx). Requests to submit the information required pursuant to § 501.603(b)(2)(ii) in an alternative format developed by the reporter are invited and will be considered by OFAC on a case-by-case basis. A copy of reports submitted pursuant to § 501.603(b)(2) shall be retained for the submitter’s records.


(3) Unblocking reports – (i) When reports are due. These reports are only due when specifically required by OFAC, such as when they are made a condition of a general or specific license, and shall be filed within 10 business days from the date property is unblocked.


(ii) Required information to be reported. Reports on the release of property from blocked status (i.e., property that is unblocked) shall include the following:


(A) The name and address of the person holding the property immediately prior to the property’s release from blocked status (i.e., the person filing the unblocking report, such as a financial institution), and the name, telephone number, and email address of a contact from whom additional information may be obtained;


(B) The associated sanctions target(s) whose property had been previously blocked and was released from blocked status, such as a Specially Designated National or other blocked person, the location(s) of the target(s), if known, and, if not evident, a narrative description of the interest(s) of the target(s) in the previously blocked property or transaction; if there is no target or the target is not known, include a reference to the relevant written communication from OFAC pursuant to which the blocking action was taken;


(C) A description of the property that has been unblocked and its location in the United States or otherwise immediately prior to its release from blocked status, including any relevant account numbers and account types, check numbers, reference numbers, dates, or other information necessary to identify the property;


(D) The date the property was unblocked;


(E) The actual value of the property that was released from blocked status in U.S. Dollars. If the property represented an outstanding loan, a credit card receivable, or other property with a negative balance, the amount unblocked should be reported as $0.00 (zero) with the amount owed reflected in a narrative description. Trade finance documents should also be reported as $0.00 (zero) with the value of the shipment reflected in a narrative description. Transactions that were previously blocked in foreign currencies and were unblocked in a foreign currency must be reported in U.S. Dollars with the foreign currency amount and notional exchange rate in the narrative;


(F) The legal authority or authorities under which the property was unblocked. This may include, for example, reference to a specific or general license under an applicable part of this chapter or an E.O.; and


(G) A copy of the original blocking report filed with OFAC pursuant to § 501.603(b)(1), when available.


(c) Reports on retained funds pursuant to § 596.504(b) of this chapter. The reporting requirements set forth in this section are applicable to any person retaining funds pursuant to § 596.504(b) or releasing such funds.


(d) Where to report. All reports under this section shall be submitted to OFAC using one of the following methods: Email: [email protected]; U.S. mail: Office of Foreign Assets Control, Sanctions Compliance and Evaluation Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW, Freedman’s Bank Building, Washington, DC 20220; or any other official reporting option, including electronic, as specified by OFAC on its website (http://www.treasury.gov/ofac). OFAC strongly prefers to receive reports made pursuant to this section by email or any other official electronic reporting option, as specified by OFAC on its website.


(e) Rules governing availability of information. OFAC records are made available to the public in accordance with the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the provisions of 31 CFR part 1. See 31 CFR 1.5 for provisions pertaining to business information. Reports on blocked and unblocked property and the information required to be reported to OFAC pursuant to this section are subject to the FOIA. Information provided to OFAC pursuant to this section generally will be released upon the receipt of a valid FOIA request, unless OFAC determines that such information should be withheld in accordance with an applicable FOIA exemption.


[84 FR 29058, June 21, 2019]


§ 501.604 Reports on rejected transactions.

(a) Who must report – (1) Persons rejecting transactions. Any U.S. person (or person subject to U.S. jurisdiction), including a financial institution, that rejects a transaction that is not blocked under the provisions of this chapter, but where processing or engaging in the transaction would nonetheless violate a provision contained in this chapter, shall submit a report to the Office of Foreign Assets Control (OFAC).


(2) Financial institution. For purposes of this section, the term “financial institution” includes a banking institution, domestic bank, United States depository institution, financial institution, or U.S. financial institution, as those terms are defined in the applicable part of this chapter.


(3) Transaction. The term transaction includes transactions related to wire transfers, trade finance, securities, checks, foreign exchange, and goods or services.


(b) Required information to be reported. Reports on rejected transactions shall include the following:


(1) The name and address of the person that rejected the transaction pursuant to this chapter (i.e., the person filing the report on the rejected transaction, such as a financial institution), and the name and telephone number of a contact from whom additional information may be obtained;


(2) A description of the rejected transaction, including the type of transaction; any persons, including financial institutions, participating in the transaction and their respective locations (e.g., customers, beneficiaries, originators, letter of credit applicants, and their banks; intermediary banks; correspondent banks; issuing banks; and advising or confirming banks); a description of the property that is the subject of the transaction; and any reference numbers, account numbers, dates, or other information necessary to identify the transaction;


(3) If applicable, the associated sanctions target(s) whose involvement in the transaction has resulted in the transaction being rejected, the location(s) of the associated sanctions target(s), if known, and, if not evident, a narrative description of the interest(s) of the target(s) in the transaction;


(4) The date the transaction was rejected;


(5) The actual, or if unknown, estimated value of the property in U.S. Dollars. Rejected trade documents should be reported as $0.00 (zero) with the value of the shipment reflected in a narrative description. Rejected transactions in foreign currencies must be reported in U.S. Dollars with the foreign currency amount and notional exchange rate in a narrative description;


(6) The legal authority or authorities under which the transaction was rejected. This may include a reference to the sanctions program (current programs are listed here: www.treasury.gov/resource-center/sanctions/SDN-List/Pages/program_tags.aspx), the applicable part of this chapter (e.g., 31 CFR part 515, 31 CFR part 544), an Executive Order (E.O.) (e.g., E.O. 13224, E.O. 13599), or a statute (e.g., Foreign Narcotics Kingpin Designation Act). (Note: For this purpose, the term “SDN” is generic and cannot be used to identify the legal authority or authorities for rejecting transactions); and


(7) A copy of any related payment or transfer instructions, check, letter of credit, accompanying bill of lading, invoice, or any other relevant documentation received in connection with the transaction.


(c) When reports are due. Reports shall be filed within 10 business days of the rejected transaction prohibited by the provisions of this chapter.


(d) Where to report. Reports under this section shall be submitted to OFAC using one of the following methods: Email: [email protected]; U.S. mail: Office of Foreign Assets Control, Sanctions Compliance and Evaluation Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW, Freedman’s Bank Building, Washington, DC 20220; or any other official reporting option, including electronic, as specified by OFAC on its website (http://www.treasury.gov/ofac). OFAC strongly prefers to receive reports made pursuant to this section by email or any other official electronic reporting option, as specified by OFAC on its website.


(e) Rules governing availability of information. OFAC records are made available to the public in accordance with the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the provisions of 31 CFR part 1. See 31 CFR 1.5 for provisions pertaining to business information. Reports on rejected transactions and the information required to be reported to OFAC pursuant to this section are subject to the FOIA. Information provided to OFAC pursuant to this section generally will be released upon the receipt of a valid FOIA request, unless OFAC determines that such information should be withheld in accordance with an applicable FOIA exemption.


[84 FR 29060, June 21, 2019]


§ 501.605 Reports on litigation, arbitration, and dispute resolution proceedings.

(a) U.S. persons (or persons subject to the jurisdiction of the United States in the case of parts 500 and 515 of this chapter) participating in litigation, arbitration, or other binding alternative dispute resolution proceedings in the United States on behalf of or against persons whose property or interests in property are blocked or whose funds have been retained pursuant to § 596.504(b) of this chapter, or when the outcome of any proceeding may affect blocked property or retained funds, must:


(1) Provide notice of such proceedings upon their commencement or upon submission or receipt of documents bringing the proceedings within the terms of the introductory text to this paragraph (a);


(2) Submit copies of all pleadings, motions, memoranda, exhibits, stipulations, correspondence, and proposed orders or judgments (including any proposed final judgment or default judgment) submitted to the court or other adjudicatory body, and all orders, decisions, opinions, or memoranda issued by the court, to the Chief Counsel, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW. – Annex, Washington, DC 20220, within 10 days of filing, submission or issuance. This paragraph (a)(2) shall not apply to discovery requests or responses, documents filed under seal, or requests for procedural action not seeking action dispositive of the proceedings (such as requests for extension of time to file); and


(3) Report by immediate facsimile transmission to the Chief Counsel, Office of Foreign Assets Control, at facsimile number 202/622-1911, the scheduling of any hearing or status conference in the proceedings whenever it appears that the court or other adjudicatory body may issue an order or judgment in the proceedings (including a final judgment or default judgment) or is considering or may decide any pending request dispositive of the merits of the proceedings or of any claim raised in the proceedings.


(b) The reporting requirements of paragraph (a) of this section do not apply to proceedings to which the Office of Foreign Assets Control is a party.


(c) Persons initiating proceedings subject to the reporting requirements of this section must notify the court or other adjudicatory body of the restrictions set forth under the applicable part in this chapter governing the transfer of blocked property or funds retained pursuant to § 596.504(b) of this chapter, including the prohibition on any unlicensed attachment, judgment, decree, lien, execution, garnishment or other judicial process with respect to any property in which, on or after the applicable effective date, there existed an interest of any person whose property and property interests were subject to blocking pursuant to this chapter or were subject to retention pursuant to § 596.504(b) of this chapter.


§ 501.606 Reporting and recordkeeping requirements applicable to economic sanctions programs.

The reporting and recordkeeping requirements set forth in this subpart are applicable to economic sanctions programs for which implementation and administration have been delegated to the Office of Foreign Assets Control.


Subpart D – Trading With the Enemy Act (TWEA) Penalties


Source:68 FR 53642, Sept. 11, 2003, unless otherwise noted.

§ 501.700 Applicability.

This subpart is applicable only to those parts of chapter V promulgated pursuant to the TWEA, which include parts 500, 505, and 515.


§ 501.701 Penalties.

(a) Attention is directed to section 16 of the TWEA, as adjusted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note), which provides that:


(1) Persons who willfully violate any provision of TWEA or any license, rule, or regulation issued thereunder, and persons who willfully violate, neglect, or refuse to comply with any order of the President issued in compliance with the provisions of TWEA shall, upon conviction, be fined not more than $1,000,000 or, if an individual, be imprisoned for not more than 20 years, or both.


(2) Any property, funds, securities, papers, or other articles or documents, or any vessel, together with its tackle, apparel, furniture, and equipment, concerned in a violation of TWEA may upon conviction be forfeited to the United States Government.


(3) The Secretary of the Treasury may impose a civil penalty of not more than $97,529 per violation on any person who violates any license, order, or regulation issued under TWEA.



Note to paragraph (a)(3):

The current civil penalty cap may be adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).


(4) Any property, funds, securities, papers, or other articles or documents, or any vessel, together with its tackle, apparel, furniture, and equipment, that is the subject of a violation subject to a civil penalty issued pursuant to TWEA shall, at the discretion of the Secretary of the Treasury, be forfeited to the United States Government.


(b) The criminal penalties provided in TWEA are subject to increase pursuant to 18 U.S.C. 3571 which, when read in conjunction with section 16 of TWEA, provides that persons convicted of violating TWEA may be fined up to the greater of either $250,000 for individuals and $1,000,000 for organizations or twice the pecuniary gain or loss from the violation.


(c) Attention is directed to 18 U.S.C. 1001, which provides that whoever, in any matter within the jurisdiction of any department or agency of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both.


[68 FR 53642, Sept. 11, 2003, as amended at 68 FR 61361, Oct. 28, 2003; 81 FR 43073, July 1, 2016; 82 FR 10435, Feb. 10, 2017; 83 FR 11877, Mar. 19, 2018; 84 FR 27715, June 14, 2019; 84 FR 29061, June 21, 2019; 85 FR 19885, Apr. 9, 2020; 86 FR 14536, Mar. 17, 2021; 87 FR 7370, Feb. 9, 2022]


§ 501.702 Definitions.

(a) Chief Counsel means the Chief Counsel (Foreign Assets Control), Office of the General Counsel, Department of the Treasury.


(b) Day means calendar day. In computing any period of time prescribed in or allowed by this subpart, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included unless it is a Saturday, Sunday, or Federal legal holiday, in which event the period runs until the end of the next day that is not a Saturday, Sunday, or Federal legal holiday. Intermediate Saturdays, Sundays, and Federal legal holidays shall be excluded from the computation when the period of time prescribed or allowed is seven days or less, not including any additional time allowed for service by mail. If on the day a filing is to be made, weather or other conditions have caused the designated filing location to close, the filing deadline shall be extended to the end of the next day that the filing location is not closed and that is not a Saturday, a Sunday, or a Federal legal holiday. If service is made by mail, three days shall be added to the prescribed period for response.


(c) Department means the Department of the Treasury.


(d) Director means the Director of the Office of Foreign Assets Control, Department of the Treasury.


(e) Ex Parte Communication means any material oral or written communication not on the public record concerning the merits of a proceeding with respect to which reasonable prior notice to all parties is not given, on any material matter or proceeding covered by these rules, that takes place between: A party to the proceeding, a party’s counsel, or any other interested individual; and the Administrative Law Judge or Secretary’s designee handling that proceeding. A request to learn the status of a proceeding does not constitute an ex parte communication; and settlement inquiries and discussions do not constitute ex parte communications.


(f) General Counsel means the General Counsel of the U.S. Department of the Treasury.


(g) Order of Settlement means a written order issued by the Director terminating a civil penalty action. An Order of Settlement does not constitute an agency decision that any violation took place.


(h) Order Instituting Proceedings means a written order issued by the Director to initiate a civil penalty hearing.


(i) Prepenalty Notice means a written notification from the Director informing a respondent of the alleged violation(s) and the respondent’s right to respond.


(j) Penalty Notice means a written notification from the Director informing a respondent that the Director has made a finding of violation and, absent a request for a hearing, will impose a civil monetary penalty.


(k) Proceeding means any agency process initiated by an “Order Instituting Proceedings,” or by the filing of a petition for review of an Administrative Law Judge’s decision or ruling.


(l) Respondent means any individual alleged by the Director to have violated a TWEA-based sanctions regulation.


(m) Secretary’s designee means a U.S. Treasury Department official delegated responsibility by the Secretary of the Treasury to consider petitions for review of Administrative Law Judge decisions made in civil penalty hearings conducted pursuant to this subpart.


(n) Secretary means the Secretary of the Treasury.


§ 501.703 Overview of civil penalty process and construction of rules.

(a) The administrative process for enforcing TWEA sanctions programs proceeds as follows:


(1) The Director of the Office of Foreign Assets Control will notify a suspected violator (hereinafter “respondent”) of an alleged violation by issuing a “Prepenalty Notice.” The Prepenalty Notice shall describe the alleged violation(s) and include a proposed civil penalty amount.


(2) The respondent will have 60 days from the date the Prepenalty Notice is served to make a written presentation either defending against the alleged violation or admitting the violation. A respondent who admits a violation may offer information as to why a monetary penalty should not be imposed or why, if imposed, the monetary penalty should be in a lesser amount than proposed.


(3) Absent a settlement agreement or a finding that no violation occurred, the Director of the Office of Foreign Assets Control will issue a “Penalty Notice.” The respondent will have 30 days from the date of service to either pay the penalty or request a hearing.


(4) If the respondent requests a hearing, the Director of the Office of Foreign Assets Control will have two options:


(i) The Director may issue an “Order Instituting Proceedings” and refer the matter to an Administrative Law Judge for a hearing and decision; or


(ii) The Director may determine to discontinue the penalty action based on information presented by the respondent.


(5) Absent review by a Secretary’s designee, the decision of the Administrative Law Judge will become the final decision of the Department without further proceedings.


(6) If review is taken by a Secretary’s designee, the Secretary’s designee reaches the final decision of the Department.


(7) A respondent may seek judicial review of the final decision of the Department.


(b) Construction of rules. The rules contained in this subpart shall be construed and administered to promote the just, speedy, and inexpensive determination of every action. To the extent there is a conflict between the rules contained in this subpart and a procedural requirement contained in any statute, the requirement in the statute shall control.


§ 501.704 Appearance and practice.

No person shall be represented before the Director in any civil penalty matter, or an Administrative Law Judge or the Secretary’s designee in a civil penalty hearing, under this subpart except as provided in this section.


(a) Representing oneself. In any proceeding, an individual may appear on his or her own behalf.


(b) Representative. Upon written notice to the Director,


(1) A respondent may be represented by a personal representative. If a respondent wishes to be represented by counsel, such counsel must be an attorney at law admitted to practice before the Supreme Court of the United States, the highest court of any State, commonwealth, possession, or territory of the United States, or the District of Columbia;


(2) A duly authorized member of a partnership may represent the partnership; and


(3) A bona fide officer, director, or employee of a corporation, trust or association may represent the corporation, trust or association.


(c) Director representation. The Director shall be represented by members of the Office of Chief Counsel or any other counsel specifically assigned by the General Counsel.


(d) Conflicts of interest – (1) Conflict of interest in representation. No individual shall appear as representative for a respondent in a proceeding conducted pursuant to this subpart if it reasonably appears that such representation may be materially limited by that representative’s responsibilities to a third person, or by that representative’s own interests.


(2) Corrective measures. An Administrative Law Judge may take corrective measures at any stage of a proceeding to cure a conflict of interest in representation, including the issuance of an order limiting the scope of representation or disqualifying an individual from appearing in a representative capacity for the duration of the proceeding.


§ 501.705 Service and filing.

(a) Service of Prepenalty Notice, Penalty Notice, Acknowledgment of Hearing Request and Order Instituting Proceedings. The Director shall cause any Prepenalty Notice, Penalty Notice, Acknowledgment of Hearing Request, Order Instituting Proceedings, and other related orders and decisions, or any amendments or supplements thereto, to be served upon the respondent.


(1) Service on individuals. Service shall be complete:


(i) Upon the date of mailing by first class (regular) mail to the respondent at the respondent’s last known address, or to a representative authorized to receive service, including qualified representatives noticed to the Director pursuant to § 501.704. Absent satisfactory evidence in the administrative record to the contrary, the Director may presume that the date of mailing is the date stamped on the first page of the notice or order. The respondent may rebut the presumption that a notice or order was mailed on the stamped mailing date only by presenting evidence of the postmark date on the envelope in which the notice or order was mailed;


(ii) Upon personal service on the respondent; or leaving a copy at the respondent’s place of business with a clerk or other person in charge thereof; or leaving a copy at the respondent’s dwelling house or usual place of abode with a person at least 18 years of age then residing therein; or with any other representative authorized by appointment or by law to accept or receive service for the respondent, including representatives noticed to the Director pursuant to § 501.704; and evidenced by a certificate of service signed and dated by the individual making such service, stating the method of service and the identity of the individual with whom the notice or order was left; or


(iii) Upon proof of service on a respondent who is not resident in the United States by any method of service permitted by the law of the jurisdiction in which the respondent resides or is located, provided the requirements of such foreign law satisfy due process requirements under United States law with respect to notice of administrative proceedings, and where applicable laws or intergovernmental agreements or understandings make the methods of service set forth in paragraphs (a)(1)(i) and (ii) of this section inappropriate or ineffective for service upon the nonresident respondent.


(2) Service on corporations and other entities. Service is complete upon delivering a copy of the notice or order to a partner, bona fide officer, director, managing or general agent, or any other agent authorized by appointment or by law to receive such notice, by any method specified in paragraph (a)(1) of this section.


(b) Service of responses to Prepenalty Notice, Penalty Notice, and requests for a hearing. A respondent shall serve a response to a Prepenalty Notice and any request for a hearing on the Director through the Chief of Civil Penalties, Office of Foreign Assets Control, U.S. Treasury Department, 1500 Pennsylvania Avenue, NW., Washington DC 20220, with the envelope prominently marked “Urgent: Part 501 Action.” Service shall be complete upon the date of mailing, as evidenced by the post-mark date on the envelope, by first class (regular) mail.


(c) Service or filing of papers in connection with any hearing by an Administrative Law Judge or review by the Secretary’s designee – (1) Service on the Director and/or each respondent. (i) Each paper, including each notice of appearance, written motion, brief, petition for review, statement in opposition to petition for review, or other written communication, shall be served upon the Director and/or each respondent in the proceeding in accordance with paragraph (a) of this section; provided, however, that no service shall be required in the case of documents that are the subject of a motion seeking a protective order to limit or prevent disclosure to another party.


(ii) Service upon the Director shall be made through the Chief Counsel (Foreign Assets Control), U.S. Treasury Department, 1500 Pennsylvania Avenue, NW., Washington, DC 20220, with the envelope prominently marked “Urgent: Part 501 Proceeding.”


(iii) Service may be made:


(A) As provided in paragraph (a) of this section;


(B) By mailing the papers through the U.S. Postal Service by Express Mail; or


(C) By transmitting the papers by facsimile machine where the following conditions are met:


(1) The persons serving each other by facsimile transmission have agreed to do so in a writing, signed by each party, which specifies such terms as they deem necessary with respect to facsimile machine telephone numbers to be used, hours of facsimile machine operation, the provision of non-facsimile original or copy, and any other such matters; and


(2) Receipt of each document served by facsimile is confirmed by a manually signed receipt delivered by facsimile machine or other means agreed to by the parties.


(iv) Service by U.S. Postal Service Express Mail is complete upon delivery as evidenced by the sender’s receipt. Service by facsimile is complete upon confirmation of transmission by delivery of a manually signed receipt.


(2) Filing with the Administrative Law Judge. Unless otherwise provided, all briefs, motions, objections, applications or other filings made during a proceeding before an Administrative Law Judge, and all requests for review by the Secretary’s designee, shall be filed with the Administrative Law Judge.


(3) Filing with the Secretary’s designee. And all briefs, motions, objections, applications or other filings made during a proceeding before the Secretary’s designee shall be filed with the Secretary’s designee.


(4) Certificate of service. Papers filed with an Administrative Law Judge or Secretary’s designee shall be accompanied by a certificate stating the name of each person served, the date of service, the method of service and the mailing address or facsimile telephone number to which service was made, if not made in person. If the method of service to any person is different from the method of service to any other person, the certificate shall state why a different means of service was used.


(5) Form of briefs. All briefs containing more than 10 pages shall, to the extent applicable, include a table of contents, an alphabetized table of cases, a table of statutes, and a table of other authorities cited, with references to the pages of the brief wherein they are cited.


(6) Specifications. All original documents shall be filed with the Administrative Law Judge or Secretary’s designee, as appropriate. Papers filed in connection with any proceeding shall:


(i) Be on one grade of unglazed white paper measuring 8.5 × 11 inches, except that, to the extent that the reduction of larger documents would render them illegible, such documents may be filed on larger paper;


(ii) Be typewritten or printed in either 10- or 12-point typeface or otherwise reproduced by a process that produces permanent and plainly legible copies;


(iii) Include at the head of the paper, or on a title page, the title of the proceeding, the name(s) of each respondent, the subject of the particular paper or pleading, and the file number assigned to the proceeding;


(iv) Be formatted with all margins at least 1 inch wide;


(v) Be double-spaced, with single-spaced footnotes and single-spaced indented quotations; and


(vi) Be stapled, clipped or otherwise fastened in the upper left corner.


(7) Signature requirement and effect. All papers must be dated and signed by a member of the Office of Chief Counsel, or other counsel assigned by the General Counsel to represent the Director, or a respondent or respondent’s representative, as appropriate. If a filing is signed by a respondent’s representative it shall state that representative’s mailing address and telephone number. A respondent who represents himself or herself shall sign his or her individual name and state his or her address and telephone number on every filing. A witness deposition shall be signed by the witness.


(i) Effect of signature. The signature shall constitute a certification that:


(A) The person signing the filing has read the filing;


(B) To the best of his or her knowledge, information, and belief, formed after reasonable inquiry, the filing is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and


(C) The filing is not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of adjudication.


(ii) If a filing is not signed, the Administrative Law Judge (or the Secretary’s designee) shall strike the filing, unless it is signed promptly after the omission is called to the attention of the person making the filing.


(d) Service of written orders or decisions issued by the Administrative Law Judge or Secretary’s designee. Written orders or decisions issued by the Administrative Law Judge or the Secretary’s designee shall be served promptly on each respondent and the Director pursuant to any method of service authorized under paragraph (a) of this section. Service of such orders or decisions shall be made by the Administrative Law Judge or the Secretary’s designee, as appropriate.


§ 501.706 Prepenalty Notice; issuance by Director.

(a) When required. If the Director has reason to believe there has occurred a violation of any provision of parts 500 or 515 of this chapter 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 pursuant to parts 500 or 515 of this chapter or otherwise under the Trading With the Enemy Act, and the Director determines that further civil proceedings are warranted, the Director shall issue a Prepenalty Notice. The Prepenalty Notice may be issued whether or not another agency has taken any action with respect to the matter.


(b) Contents of notice – (1) Facts of violation. The Prepenalty Notice shall describe the alleged violation, specify the laws and regulations allegedly violated, and state the amount of the proposed monetary penalty.


(2) Right to respond. The Prepenalty Notice shall inform the respondent of respondent’s right to make a written presentation within the time prescribed in § 501.707 as to why the respondent believes there should be no finding of a violation or why, if the respondent admits the violation, a monetary penalty should not be imposed or why, if imposed, the monetary penalty should be in a lesser amount than proposed. The Prepenalty Notice shall also inform the respondent that:


(i) The act of submitting a written response by the respondent is a factor that may result in a lower penalty absent any aggravating factors; and


(ii) If the respondent fails to respond to the Prepenalty Notice within the applicable 60-day period set forth in § 501.707, the Director may proceed with the issuance of a Penalty Notice.


(3) Right to request a hearing. The Prepenalty Notice shall inform the respondent of respondent’s right, if a subsequent Penalty Notice is issued, to request an administrative hearing. The Director will not consider any request for an administrative hearing until a Penalty Notice has been issued.


§ 501.707 Response to Prepenalty Notice.

(a) Deadline for response. (1) The respondent shall have 60 days after the date of service of the Prepenalty Notice pursuant to § 501.705(a) to respond thereto. The response, signed and dated, shall be served as provided in § 501.705(b).


(2) In response to a written request by the respondent, the Director may, at his or her discretion for the purpose of conducting settlement negotiations or for other valid reasons, grant additional time for a respondent to submit a response to the Prepenalty Notice.


(3) The failure to submit a response within the time period set forth in this paragraph (a), including any additional time granted by the Director, shall be deemed to be a waiver of the right to respond to the Prepenalty Notice.


(b) Form and contents of response – (1) In general. The response need not be in any particular form, but must be typewritten and contain the heading “Response to Prepenalty Notice” and the Office of Foreign Assets Control identification number shown near the top of the Prepenalty Notice. It should be responsive to the allegations contained therein and set forth the nature of the respondent’s admission of the violation, or defenses and claims for mitigation, if any.


(i) The response must admit or deny specifically each separate allegation of violation made in the Prepenalty Notice. If the respondent is without knowledge as to an allegation, the response shall so state, and such statement shall constitute a denial. Any allegation not specifically addressed in the response shall be deemed admitted.


(ii) The response must set forth any additional or new matter or arguments the respondent seeks, or shall seek, to use in support of all defenses or claims for mitigation. Any defense the respondent wishes to assert must be included in the response.


(iii) The response must accurately state (for each respondent, if applicable) the respondent’s full name and address for future service, together with a current telephone and, if applicable, facsimile machine number. If respondent is represented, the representative’s full name and address, together with telephone and facsimile numbers, may be provided instead of service information for the respondent. The respondent or respondent’s representative of record is responsible for providing timely written notice to the Director of any subsequent changes in the information provided.


(iv) Financial disclosure statement requirement. Any respondent who asserts financial hardship or an inability to pay a penalty shall include with the response a financial disclosure statement setting forth in detail the basis for asserting the financial hardship or inability to pay a penalty, subject to 18 U.S.C. 1001.


(2) Settlement. In addition, or as an alternative, to a written response to a Prepenalty Notice, the respondent or respondent’s representative may seek settlement of the alleged violation(s). See § 501.710. In the event of settlement prior to the issuance of a Penalty Notice, the claim proposed in the Prepenalty Notice will be withdrawn and the respondent will not be required to make a written response to the Prepenalty Notice. In the event no settlement is reached, a written response to the Prepenalty Notice is required pursuant to paragraph (c) of this section.


§ 501.708 Director’s finding of no penalty warranted.

If after considering any written response to the Prepenalty Notice submitted pursuant to § 501.707 and any other relevant facts, the Director determines that there was no violation or that the violation does not warrant the imposition of a civil monetary penalty, the Director promptly shall notify the respondent in writing of that determination and that no civil monetary penalty pursuant to this subpart will be imposed.


§ 501.709 Penalty notice.

(a) If, after considering any written response to the Prepenalty Notice, and any other relevant facts, the Director determines that there was a violation by the respondent and that a monetary penalty is warranted, the Director promptly shall issue a Penalty Notice informing the respondent that, absent a timely request for an administrative hearing, the Director will impose the civil monetary penalty described in the Penalty Notice. The Penalty Notice shall inform the respondent:


(1) Of the respondent’s right to submit a written request for an administrative hearing not later than 30 days after the date of service of the Penalty Notice;


(2) That in the absence of a timely request for a hearing, the issuance of the Penalty Notice constitutes final agency action;


(3) That, absent a timely request for a hearing, payment (or arrangement with the Financial Management Service of the Department for installment payment) of the assessed penalty must be made not later than 30 days after the date of service of the Penalty Notice; and


(4) That absent a timely request for a hearing, the respondent must furnish respondent’s taxpayer identification number pursuant to 31 U.S.C. 7701 and that the Director intends to use such information for the purposes of collecting and reporting on any delinquent penalty amount in the event of a failure to pay the penalty imposed.


§ 501.710 Settlement.

(a) Availability. Either the Director or any respondent may, at any time during the administrative civil penalty process described in this subpart, propose an offer of settlement. The amount accepted in settlement may be less than the civil penalty that might be imposed in the event of a formal determination of violation. Upon mutual agreement by the Director and a respondent on the terms of a settlement, the Director shall issue an Order of Settlement.


(b) Procedure – (1) Prior to issuance of Penalty Notice. Any offer of settlement made by a respondent prior to the issuance of a Penalty Notice shall be submitted, in writing, to the Chief of Civil Penalties, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.


(2) After issuance of Penalty Notice. Any offer of settlement made by a respondent after issuance of a Penalty Notice shall state that it is made pursuant to this section; shall recite or incorporate as a part of the offer the provisions of paragraphs (b)(5)(ii) and (b)(6) of this section; shall be signed by the respondent making the offer, and not only by his or her representative; and shall be submitted to the Chief Counsel.


(3) Extensions of time. The submission of any settlement offer does not provide a basis for adjourning or otherwise delaying all or any portion of the administrative civil penalty process.


(i) Prior to issuance of Order Instituting Proceedings. Any respondent (or potential respondent in the case of a pending Prepenalty Notice) may request, in writing, that the Director withhold issuance of any such notice, or grant an extension of time to respond to any such Notice, for a period not to exceed 60 days for the exclusive purpose of effecting settlement. The Director may grant any such request, in writing, under terms and conditions within his or her discretion.


(ii) After issuance of Order Instituting Proceedings. Upon mutual agreement of the Director and a respondent, the Administrative Law Judge may grant an extension of time, for a period not to exceed 60 days, for the exclusive purpose of effecting settlement.


(4) Views of Administrative Law Judge. Where an Administrative Law Judge is assigned to a proceeding, the Director or the respondent may request that the Administrative Law Judge express his or her views regarding the appropriateness of the offer of settlement. A request for the Administrative Law Judge to express his or her views on an offer of settlement or otherwise to participate in a settlement conference constitutes a waiver by the party making the request of any right to claim bias or prejudgment by the Administrative Law Judge based on the views expressed.


(5) Waivers. (i) By submitting an offer of settlement, a respondent making the offer waives, subject to acceptance of the offer:


(A) All hearings pursuant to section 16 of the Trading with the Enemy Act (50 U.S.C. App. 16);


(B) The filing of proposed findings of fact and conclusions of law;


(C) Proceedings before, and a decision by, an Administrative Law Judge;


(D) All post-hearing procedures; and


(E) Judicial review by any court.


(ii) By submitting an offer of settlement the respondent further waives:


(A) Such provisions of this subpart or other requirements of law as may be construed to prevent any member of the Director’s staff, or members of the Office of Chief Counsel or other counsel assigned by the General Counsel, from participating in or advising the Director as to any order, opinion, finding of fact, or conclusion of law to be entered pursuant to the offer; and


(B) Any right to claim bias or prejudgment by the Director based on the consideration of or discussions concerning settlement of all or any part of the proceeding.


(6) If the Director rejects the offer of settlement, the respondent shall be so notified in writing and the offer of settlement shall be deemed withdrawn. The rejected offer shall not constitute a part of the record in any proceeding against the respondent making the offer, provided, however, that rejection of an offer of settlement does not affect the continued validity of waivers pursuant to paragraph (b)(5) of this section with respect to any discussions concerning the rejected offer of settlement.


(7) No settlement offer or proposal, or any subsequent negotiation or resolution, is admissible as evidence in any administrative proceeding initiated by the Director.


§ 501.711 Hearing request.

(a) Deadline for request. A request for an agency hearing shall be served on the Director not later than 30 days after the date of service of the Penalty Notice. See § 501.705(b). A respondent may not reserve the right to request a hearing after expiration of the 30 calendar day period. A request for a hearing that is not made as required by this paragraph shall constitute a waiver of the respondent’s right to a hearing.


(b) Form and contents of request. The request need not be in any particular form, but must be typewritten and contain the heading “Request for Agency Hearing”. The request must include the Office of Foreign Assets Control identification number shown near the top of the Penalty Notice. It should be responsive to the determination contained in the Penalty Notice and set forth the nature of the respondent’s defenses or claims for mitigation, if any.


(1) The request must admit or deny specifically each separate determination of violation made in the Penalty Notice. If the respondent is without knowledge as to a determination, the request shall so state, and such statement shall constitute a denial. Any determination not specifically addressed in the response shall be deemed admitted.


(2) The request must set forth any additional or new matter or arguments the respondent seeks, or shall seek, to use in support of all defenses or claims for mitigation. Any defense the respondent wishes to assert must be included in the request.


(3) The request must accurately state, for each respondent (if applicable), the respondent’s full name and address for future service, together with current telephone and, if applicable, a facsimile machine number. If respondent is represented, the representative’s full name and address, together with telephone and facsimile numbers, may be provided in lieu of service information for the respondent. The respondent or respondent’s representative is responsible for providing timely written notice to the Director of any subsequent changes in the information provided.


(c) Signature requirement. The respondent or, if represented, the respondent’s representative, must sign the hearing request.


§ 501.712 Acknowledgment of hearing request.

No later than 60 days after service of any hearing request, the Director shall acknowledge receipt and inform a respondent, in writing, whether an Order Instituting Proceedings shall be issued.


§ 501.713 Order Instituting Proceedings.

If a respondent makes a timely request for a hearing, the Director shall determine, at his or her option, whether to dismiss the violation(s) set forth in the Penalty Notice or to issue an Order Instituting Proceedings to initiate the hearing process. The Order shall be served on the respondent(s) as provided in § 501.705(c)(1). The Director may, in his or her discretion, withdraw an Order Instituting Proceedings at any time prior to the issuance of a decision by the Administrative Law Judge.


(a) Content of Order. The Order Instituting Proceedings shall:


(1) Be prepared by the Office of the Chief Counsel or other counsel assigned by the General Counsel and based on information provided by the Director;


(2) State the legal authority under which the hearing is to be held;


(3) Contain a short and plain statement of the alleged violation(s) to be considered and determined (including the matters of fact and law asserted) in such detail as will permit a specific response thereto;


(4) State the amount of the penalty sought in the proceeding; and


(5) Be signed by the Director.


(b) Combining penalty actions. The Director may combine claims contained in two or more Penalty Notices involving the same respondent, and for which hearings have been requested, into a single Order Instituting Proceedings.


(c) Amendment to Order Instituting Proceedings. Upon motion by the Director, the Administrative Law Judge may, at any time prior to issuance of a decision, permit the Director to amend an Order Instituting Proceedings to include new matters of fact or law that are within the scope of the original Order Instituting Proceedings.


§ 501.714 Answer to Order Instituting Proceedings.

(a) When required. Not later than 45 days after service of the Order Instituting Proceedings, the respondent shall file, with the Administrative Law Judge and the Office of Chief Counsel, an answer to each of the allegations contained therein. If the Order Instituting Proceedings is amended, the Administrative Law Judge may require that an amended answer be filed and, if such an answer is required, shall specify a date for the filing thereof.


(b) Contents; effect of failure to deny. Unless otherwise directed by the Administrative Law Judge, an answer shall specifically admit, deny, or state that the respondent does not have, and is unable to obtain, sufficient information to admit or deny each allegation in the Order Instituting Proceedings. When a respondent intends to deny only a part of an allegation, the respondent shall specify so much of it as is true and shall deny only the remainder. A statement of lack of information shall have the effect of a denial. A defense of res judicata, statute of limitations or any other matter constituting an affirmative defense shall be asserted in the answer. Any allegation not specifically addressed in the answer shall be deemed admitted.


(c) Motion for more definite statement. A respondent may file with an answer a motion for a more definite statement of specified matters of fact or law to be considered or determined. Such motion shall state the respects in which, and the reasons why, each such matter of fact or law should be required to be made more definite. If the motion is granted, the order granting such motion shall set the periods for filing such a statement and any answer thereto.


(d) Amendments. A respondent may amend its answer at any time by written consent of the Director or with permission of the Administrative Law Judge. Permission shall be freely granted when justice so requires.


(e) Failure to file answer: default. If a respondent fails to file an answer required by this subpart within the time prescribed, such respondent may be deemed in default pursuant to § 501.716(a). A party may make a motion to set aside a default pursuant to § 501.726(e).


§ 501.715 Notice of Hearing.

(a) If the Director issues an Order Instituting Proceedings, the respondent shall receive not less than 45 days notice of the time and place of the hearing.


(b) Time and place of hearing. All hearings shall be held in the Washington, DC metropolitan area unless, based on extraordinary reasons, otherwise mutually agreed by the respondent and the Director. The time for any hearing shall be fixed with due regard for the public interest and the convenience and necessity of the parties or their representatives. Requests to change the time of a hearing may be submitted to the Administrative Law Judge, who may modify the hearing date(s) and/or time(s) and place. All requests for a change in the date and time and/or place of a hearing must be received by the Administrative Law Judge and served upon the parties no later than 15 days before the scheduled hearing date.


(c) Failure to appear at hearings: default. Any respondent named in an order instituting proceedings as a person against whom findings may be made or penalties imposed who fails to appear (in person or through a representative) at a hearing of which he or she has been duly notified may be deemed to be in default pursuant to § 501.716(a). Without further proceedings or notice to the respondent, the Administrative Law Judge may enter a finding that the right to a hearing was waived, and the Penalty Notice shall constitute final agency action as provided in § 501.709(a)(2). A respondent may make a motion to set aside a default pursuant to § 501.726(e).


§ 501.716 Default.

(a) A party to a proceeding may be deemed to be in default and the Administrative Law Judge (or the Secretary’s designee during review proceedings) may determine the proceeding against that party upon consideration of the record if that party fails:


(1) To appear, in person or through a representative, at any hearing or conference of which the party has been notified;


(2) To answer, to respond to a dispositive motion within the time provided, or otherwise to prosecute or defend the proceeding; or


(3) To cure a deficient filing within the time specified by the Administrative Law Judge (or the Secretary’s designee) pursuant to § 501.729(b).


(b) In deciding whether to determine the proceedings against a party deemed to be in default, the Administrative Law Judge shall consider the record of the proceedings (including the Order Instituting Proceedings) and shall construe contested matters of fact and law against the party deemed to be in default.


(c) For information and procedures pertaining to a motion to set aside a default, see § 501.726(e).


§ 501.717 Consolidation of proceedings.

By order of the Administrative Law Judge, proceedings involving common questions of law and fact may be consolidated for hearing of any or all the matters at issue in such proceedings. The Administrative Law Judge may make such orders concerning the conduct of such proceedings as he or she deems appropriate to avoid unnecessary cost or delay. Consolidation shall not prejudice any rights under this subpart and shall not affect the right of any party to raise issues that could have been raised if consolidation had not occurred.


§ 501.718 Conduct and order of hearings.

All hearings shall be conducted in a fair, impartial, expeditious and orderly manner. Each party has the right to present its case or defense by oral and documentary evidence and to conduct such cross examination as may be required for full disclosure of the relevant facts. The Director shall present his or her case-in-chief first. The Director shall be the first party to present an opening statement and a closing statement and may make a rebuttal statement after the respondent’s closing statement.


§ 501.719 Ex parte communications.

(a) Prohibition. (1) From the time the Director issues an Order Instituting Proceedings until the date of final decision, no party, interested person, or representative thereof shall knowingly make or cause to be made an ex parte communication.


(2) Except to the extent required for the disposition of ex parte communication matters as authorized by law, the Secretary’s designee and the Administrative Law Judge presiding over any proceeding may not:


(i) Consult a person or party on an issue, unless on notice and opportunity for all parties to participate; or


(ii) Be responsible to or subject to the supervision, direction of, or evaluation by, an employee engaged in the performance of investigative or prosecutorial functions for the Department.


(b) Procedure upon occurrence of ex parte communication. If an ex parte communication is received by the Administrative Law Judge or the Secretary’s designee, the Administrative Law Judge or the Secretary’s designee, as appropriate, shall cause all of such written communication (or, if the communication is oral, a memorandum stating the substance of the communication) to be placed on the record of the proceeding and served on all parties. A party may, not later than 10 days after the date of service, file a response thereto and may recommend that the person making the prohibited communication be sanctioned pursuant to paragraph (c) of this section.


(c) Sanctions. Any party to the proceeding, a party’s representative, or any other interested individual, who makes a prohibited ex parte communication, or who encourages or solicits another to make any such communication, may be subject to any appropriate sanction or sanctions imposed by the Administrative Law Judge or the Secretary’s designee, as appropriate, for good cause shown, including, but not limited to, exclusion from the hearing and an adverse ruling on the issue that is the subject of the prohibited communication.


§ 501.720 Separation of functions.

Any officer or employee engaged in the performance of investigative or prosecutorial functions for the Department in a proceeding as defined in § 501.702 may not, in that proceeding or one that is factually related, participate or advise in the decision pursuant to Section 557 of the Administrative Procedure Act, 5 U.S.C. 557, except as a witness or counsel in the proceeding.


§ 501.721 Hearings to be public.

All hearings, except hearings on applications for confidential treatment filed pursuant to § 501.725(b), shall be public unless otherwise ordered by the Administrative Law Judge or the Secretary’s designee, as appropriate, on his or her own motion or the motion of a party.


§ 501.722 Prehearing conferences.

(a) Purposes of conferences. The purposes of prehearing conferences include, but are not limited to:


(1) Expediting the disposition of the proceeding;


(2) Establishing early and continuing control of the proceeding by the Administrative Law Judge; and


(3) Improving the quality of the hearing through more thorough preparation.


(b) Procedure. On his or her own motion or at the request of a party, the Administrative Law Judge may direct a representative or any party to attend one or more prehearing conferences. Such conferences may be held with or without the Administrative Law Judge present as the Administrative Law Judge deems appropriate. Where such a conference is held outside the presence of the Administrative Law Judge, the Administrative Law Judge shall be advised promptly by the parties of any agreements reached. Such conferences also may be held with one or more persons participating by telephone or other remote means.


(c) Subjects to be discussed. At a prehearing conference consideration may be given and action taken with respect to the following:


(1) Simplification and clarification of the issues;


(2) Exchange of witness and exhibit lists and copies of exhibits;


(3) Admissions of fact and stipulations concerning the contents, authenticity, or admissibility into evidence of documents;


(4) Matters of which official notice may be taken;


(5) The schedule for exchanging prehearing motions or briefs, if any;


(6) The method of service for papers;


(7) Summary disposition of any or all issues;


(8) Settlement of any or all issues;


(9) Determination of hearing dates (when the Administrative Law Judge is present);


(10) Amendments to the Order Instituting Proceedings or answers thereto;


(11) Production of documents as set forth in § 501.723, and prehearing production of documents in response to subpoenas duces tecum as set forth in § 501.728; and


(12) Such other matters as may aid in the orderly and expeditious disposition of the proceeding.


(d) Timing of conferences. Unless the Administrative Law Judge orders otherwise, an initial prehearing conference shall be held not later than 14 days after service of an answer. A final conference, if any, should be held as close to the start of the hearing as reasonable under the circumstances.


(e) Prehearing orders. At or following the conclusion of any conference held pursuant to this rule, the Administrative Law Judge shall enter written rulings or orders that recite the agreement(s) reached and any procedural determinations made by the Administrative Law Judge.


(f) Failure to appear: default. A respondent who fails to appear, in person or through a representative, at a prehearing conference of which he or she has been duly notified may be deemed in default pursuant to § 501.716(a). A respondent may make a motion to set aside a default pursuant to § 501.726(e).


§ 501.723 Prehearing disclosures; methods to discover additional matter.

(a) Initial disclosures. (1) Except to the extent otherwise stipulated or directed by order of the Administrative Law Judge, a party shall, without awaiting a discovery request, provide to the opposing party:


(i) The name and, if known, the address and telephone number of each individual likely to have discoverable information that the disclosing party may use to support its claims or defenses, unless solely for impeachment of a witness appearing in person or by deposition, identifying the subjects of the information; and


(ii) A copy, or a description by category and location, of all documents, data compilations, and tangible things that are in the possession, custody, or control of the party and that the disclosing party may use to support its claims or defenses, unless solely for impeachment of a witness appearing in person or by deposition;


(2) The disclosures described in paragraph (a)(1)(i) of this section shall be made not later than 30 days after the issuance of an Order Instituting Proceedings, unless a different time is set by stipulation or by order of the Administrative Law Judge.


(b) Prehearing disclosures. (1) In addition to the disclosures required by paragraph (a) of this section, a party must provide to the opposing party, and promptly file with the Administrative Law Judge, the following information regarding the evidence that it may present at hearing for any purpose other than solely for impeachment of a witness appearing in person or by deposition:


(i) An outline or narrative summary of its case or defense (the Order Instituting Proceedings will usually satisfy this requirement for the Director and the answer thereto will usually satisfy this requirement for the respondent);


(ii) The legal theories upon which it will rely;


(iii) Copies and a list of documents or exhibits that it intends to introduce at the hearing; and


(iv) A list identifying each witness who will testify on its behalf, including the witness’s name, occupation, address, phone number, and a brief summary of the expected testimony.


(2) Unless otherwise directed by the Administrative Law Judge, the disclosures required by paragraph (b)(1) of this section shall be made not later than 30 days before the date of the hearing.


(c) Disclosure of expert testimony. A party who intends to call an expert witness shall submit, in addition to the information required by paragraph (b)(1)(iv) of this section, a statement of the expert’s qualifications, a list of other proceedings in which the expert has given expert testimony, and a list of publications authored or co-authored by the expert.


(d) Form of disclosures. Unless the Administrative Law Judge orders otherwise, all disclosures under paragraphs (a) through (c) of this section shall be made in writing, signed, and served as provided in § 501.705.


(e) Methods to discover additional matter. Parties may obtain discovery by one or more of the following methods: Depositions of witnesses upon oral examination or written questions; written interrogatories to another party; production of documents or other evidence for inspection; and requests for admission. All depositions of Federal employees must take place in Washington, DC, at the Department of the Treasury or at the location where the Federal employee to be deposed performs his or her duties, whichever the Federal employee’s supervisor or the Office of Chief Counsel shall deem appropriate. All depositions shall be held at a date and time agreed by the Office of Chief Counsel and the respondent or respondent’s representative, and for an agreed length of time.


(f) Discovery scope and limits. Unless otherwise limited by order of the Administrative Law Judge in accordance with paragraph (f)(2) of this section, the scope of discovery is as follows:


(1) In general. The availability of information and documents through discovery is subject to the assertion of privileges available to the parties and witnesses. Privileges available to the Director and the Department include exemptions afforded pursuant to the Freedom of Information Act (5 U.S.C. 552(b)(1) through (9)) and the Privacy Act (5 U.S.C. 552a). Parties may obtain discovery regarding any matter, not privileged, that is relevant to the merits of the pending action, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of any persons having knowledge of any discoverable matter. For good cause, the Administrative Law Judge may order discovery of any matter relevant to the subject matter involved in the proceeding. Relevant information need not be admissible at the hearing if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.


(2) Limitations. The Administrative Law Judge may issue any order that justice requires to ensure that discovery requests are not unreasonable, oppressive, excessive in scope or unduly burdensome, including an order to show cause why a particular discovery request is justified upon motion of the objecting party. The frequency or extent of use of the discovery methods otherwise permitted under this section may be limited by the Administrative Law Judge if he or she determines that:


(i) The discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive;


(ii) The party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or


(iii) The burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the hearing, the importance of the issues at stake, and the importance of the proposed discovery in resolving the issues.


(3) Interrogatories. Respondent’s interrogatories shall be served upon the Office of the Chief Counsel not later than 30 days after issuance of the Order Instituting Proceedings. The Director’s interrogatories shall be served by the later of 30 days after the receipt of service of respondent’s interrogatories or 40 days after issuance of the Order Instituting Proceedings if no interrogatories are filed by respondent. Parties shall respond to interrogatories not later than 30 days after the date interrogatories are received. Interrogatories shall be limited to 20 questions only. Each subpart, section, or other designation of a part of a question shall be counted as one complete question in computing the permitted 20 question total. Where more than 20 questions are served upon a party, the receiving party may determine which of the 20 questions the receiving party shall answer. The limitation on the number of questions in an interrogatory may be waived by the Administrative Law Judge.


(4) Privileged matter. Privileged documents are not discoverable. Privileges include, but are not limited to, the attorney-client privilege, attorney work-product privilege, any government’s or government agency’s deliberative-process or classified information privilege, including materials classified pursuant to Executive Order 12958 (3 CFR, 1995 Comp., p. 333) and any future Executive orders that may be issued relating to the treatment of national security information, and all materials and information exempted from release to the public pursuant to the Privacy Act (5 U.S.C. 552a) or the Freedom of Information Act (5 U.S.C. 552(b)(1) through (9)).


(g) Updating discovery. A party who has made an initial disclosure under paragraph (a) of this section or responded to a request for discovery with a disclosure or response is under a duty to supplement or correct the disclosure or response to include information thereafter acquired whenever:


(1) The party learns that in some material respect the information disclosed is incomplete or incorrect, if the additional or corrective information has not otherwise been made known to the other party during the discovery process or in writing; or


(2) Ordered by the Administrative Law Judge. The Administrative Law Judge may impose sanctions for failure to supplement or correct discovery.


(h) Time limits. All discovery, including all responses to discovery requests, shall be completed not later than 20 days prior to the date scheduled for the commencement of the hearing, unless the Administrative Law Judge finds on the record that good cause exists to grant additional time to complete discovery.


(i) Effect of failure to comply. No witness may testify and no document or exhibit may be introduced at the hearing if such witness, document, or exhibit is not listed in the prehearing submissions pursuant to paragraphs (b) and (c) of this section, except for good cause shown.


§ 501.724 Documents that may be withheld.

(a) Notwithstanding § 501.723(f), the Director or respondent may withhold a document if:


(1) The document is privileged;


(2) The document would disclose the identity of a confidential source; or


(3) The Administrative Law Judge grants leave to withhold a document or category of documents as not relevant to the subject matter of the proceeding or otherwise, for good cause shown.


(b) Nothing in paragraph (a) of this section authorizes the Director to withhold documents that contain material exculpatory evidence.


(c) Withheld document list. The Director and respondent shall provide the Administrative Law Judge, for review, a list of documents withheld pursuant to paragraphs (a)(1)-(3) of this section. The Administrative Law Judge shall determine whether any such document should be made available for inspection and copying.


§ 501.725 Confidential treatment of information in certain filings.

(a) Filing document under seal. (1) The Director may file any document or any part of a document under seal and/or seek a protective order concerning any document if disclosure of the document would be inconsistent with the protection of the public interest or if justice requires protection of any person, including a source or a party, from annoyance, threat, oppression, or undue burden or expense, or the disclosure of the information would be, or might reasonably lead to a disclosure, contrary to Executive Order 12958, as amended by Executive Order 13292, or other Executive orders concerning disclosure of information, Department regulations, or the Privacy Act, or information exempt from release under the Freedom of Information Act. The Administrative Law Judge shall allow placement of any such document under seal and/or grant a protective order upon a showing that the disclosure would be inconsistent with any such statute or Executive order, or that the harm resulting from disclosure would outweigh the benefits of disclosure.


(2) A respondent may file any document or any part of a document under seal and/or seek a protective order to limit such document from disclosure to other parties or to the public. The Administrative Law Judge shall allow placement of any document under seal and/or grant a protective order upon a showing that the harm resulting from disclosure would outweigh the benefits of disclosure.


(3) The Administrative Law Judge shall safeguard the security and integrity of any documents under seal or protective order and shall take all appropriate steps to preserve the confidentiality of such documents or any parts thereof, including closing a hearing or portions of a hearing to the public. Release of any information under seal or to the extent inconsistent with a protective order, in any form or manner, is subject to the sanctions and the exercise of the authorities as are provided with respect to ex parte communications under § 501.719.


(4) If the Administrative Law Judge denies placement of any document under seal or under protective order, any party, and any person whose document or material is at issue, may obtain interlocutory review by the Secretary’s designee. In such cases the Administrative Law Judge shall not release or expose any of the records or documents in question to the public or to any person for a period of 20 days from the date of the Administrative Law Judge’s ruling, in order to permit a party the opportunity either to withdraw the records and documents or obtain interlocutory review by the Secretary’s designee and an order that the records be placed under seal or a protective order.


(5) Upon settlement, final decision, or motion to the Administrative Law Judge for good cause shown, all materials (including all copies) under seal or protective order shall be returned to the submitting parties, except when it may be necessary to retain a record until any judicial process is completed.


(6)(i) Written notice of each request for release of documents or materials under seal or subject to a protective order shall be given to the parties at least 20 days prior to any permitted release or prior to any access not specifically authorized under a protective order. A copy of each request for information, including the name, address, and telephone number of the requester, shall be provided to the parties.


(ii) Each request for access to protected material shall include the names, addresses, and telephone numbers of all persons on whose behalf the requester seeks access to protected information. The Administrative Law Judge may impose sanctions as provided under § 501.729 for failure to provide this information.


(b) Application. An application for a protective order or to place under seal shall be filed with the Administrative Law Judge. The application shall be accompanied by a sealed copy of the materials as to which confidential treatment is sought.


(1) Procedure for supplying additional information. The person making the application may be required to furnish in writing additional information with respect to the grounds for objection to public disclosure. Failure to supply the information so requested within 14 days from the date of receipt of a notice of the information required shall be deemed a waiver of the objection to public disclosure of that portion of the information to which the additional information relates, unless the Administrative Law Judge shall otherwise order for good cause shown at or before the expiration of such 14-day period.


(2) Confidentiality of materials pending final decision. Pending the determination of the application for confidential treatment, transcripts, non-final orders including an initial decision, if any, and other materials in connection with the application shall be placed under seal; shall be for the confidential use only of the Administrative Law Judge, the Secretary’s designee, the applicant, the Director, and any other respondent and representative; and shall be made available to the public only in accordance with orders of the Administrative Law Judge or the Secretary’s designee.


(3) Public availability of orders. Any final order of the Administrative Law Judge or the Secretary’s designee denying or sustaining an application for confidential treatment shall be made public. Any prior findings or opinions relating to an application for confidential treatment under this section shall be made public at such time as the material as to which confidentiality was requested is made public.


§ 501.726 Motions.

(a) Generally. Unless made during a hearing or conference, a motion shall be in writing, shall state with particularity the grounds therefor, shall set forth the relief or order sought, and shall be accompanied by a written brief of the points and authorities relied upon. Motions by a respondent must be filed with the Administrative Law Judge and served upon the Director through the Office of Chief Counsel and with any other party respondent or respondent’s representative, unless otherwise directed by the Administrative Law Judge. Motions by the Director must be filed with the Administrative Law Judge and served upon each party respondent or respondent’s representative. All written motions must be served in accordance with, and otherwise meet the requirements of, § 501.705. The Administrative Law Judge may order that an oral motion be submitted in writing. No oral argument shall be heard on any motion unless the Administrative Law Judge otherwise directs.


(b) Opposing and reply briefs. Except as provided in § 501.741(e), briefs in opposition to a motion shall be filed not later than 15 days after service of the motion. Reply briefs shall be filed not later than 3 days after service of the opposition. The failure of a party to oppose a written motion or an oral motion made on the record shall be deemed a waiver of objection by that party to the entry of an order substantially in the form of any proposed order accompanying the motion.


(c) Dilatory motions. Frivolous, dilatory, or repetitive motions are prohibited. The filing of such motions may form the basis for sanctions.


(d) Length limitation. Except as otherwise ordered by the Administrative Law Judge, a brief in support of, or in opposition to, a motion shall not exceed 15 pages, exclusive of pages containing any table of contents, table of authorities, or addendum.


(e) A motion to set aside a default shall be made within a reasonable time as determined by the Administrative Law Judge, state the reasons for the failure to appear or defend, and, if applicable, specify the nature of the proposed defense in the proceeding. In order to prevent injustice and on such conditions as may be appropriate, the Administrative Law Judge, at any time prior to the filing of his or her decision, or the Secretary’s designee, at any time during the review process, may for good cause shown set aside a default.


§ 501.727 Motion for summary disposition.

(a) At any time after a respondent’s answer has been filed, the respondent or the Director may make a motion for summary disposition of any or all allegations contained in the Order Instituting Proceedings. If the Director has not completed presentation of his or her case-in-chief, a motion for summary disposition shall be made only with permission of the Administrative Law Judge. The facts of the pleadings of the party against whom the motion is made shall be taken as true, except as modified by stipulations or admissions made by that party, by uncontested affidavits, or by facts officially noticed pursuant to § 501.732(b).


(b) Decision on motion. The Administrative Law Judge may promptly decide the motion for summary disposition or may defer decision on the motion. The Administrative Law Judge shall issue an order granting a motion for summary disposition if the record shows there is no genuine issue with regard to any material fact and the party making the motion is entitled to a summary disposition as a matter of law.


(c) A motion for summary disposition must be accompanied by a statement of the material facts as to which the moving party contends there is no genuine issue. Such motion must be supported by documentary evidence, which may take the form of admissions in pleadings, stipulations, depositions, transcripts, affidavits, and any other evidentiary materials that the moving party contends support its position. The motion must also be accompanied by a brief containing the points and authorities in support of the moving party’s arguments. Any party opposing a motion for summary disposition must file a statement setting forth those material facts as to which such party contends a genuine dispute exists. The opposition must be supported by evidence of the same type as that submitted with the motion for summary disposition and a brief containing the points and authorities in support of the contention that summary disposition would be inappropriate.


§ 501.728 Subpoenas.

(a) Availability; procedure. In connection with any hearing before an Administrative Law Judge, either the respondent or the Director may request the issuance of subpoenas requiring the attendance and testimony of witnesses at the designated time and place of hearing, and subpoenas requiring the production of documentary or other tangible evidence returnable at a designated time and place. Unless made on the record at a hearing, requests for issuance of a subpoena shall be made in writing and served on each party pursuant to § 501.705.


(b) Standards for issuance. If it appears to the Administrative Law Judge that a subpoena sought may be unreasonable, oppressive, excessive in scope, or unduly burdensome, he or she may, in his or her discretion, as a condition precedent to the issuance of the subpoena, require the person seeking the subpoena to show the general relevance and reasonable scope of the testimony or other evidence sought. If after consideration of all the circumstances, the Administrative Law Judge determines that the subpoena or any of its terms is unreasonable, oppressive, excessive in scope, or unduly burdensome, he or she may refuse to issue the subpoena, or issue a modified subpoena as fairness requires. In making the foregoing determination, the Administrative Law Judge may inquire of the other participants whether they will stipulate to the facts sought to be proved.


(c) Service. Service of a subpoena shall be made pursuant to the provisions of § 501.705.


(d) Application to quash or modify – (1) Procedure. Any person to whom a subpoena is directed or who is an owner, creator or the subject of the documents or materials that are to be produced pursuant to a subpoena may, prior to the time specified therein for compliance, but not later than 15 days after the date of service of such subpoena, request that the subpoena be quashed or modified. Such request shall be made by application filed with the Administrative Law Judge and served on all parties pursuant to § 501.705. The party on whose behalf the subpoena was issued may, not later than 5 days after service of the application, file an opposition to the application.


(2) Standards governing application to quash or modify. If the Administrative Law Judge determines that compliance with the subpoena would be unreasonable, oppressive or unduly burdensome, the Administrative Law Judge may quash or modify the subpoena, or may order return of the subpoena only upon specified conditions. These conditions may include, but are not limited to, a requirement that the party on whose behalf the subpoena was issued shall make reasonable compensation to the person to whom the subpoena was addressed for the cost of copying or transporting evidence to the place for return of the subpoena.


(e) Witness fees and mileage. Witnesses summoned to appear at a proceeding shall be paid the same fees and mileage that are paid to witnesses in the courts of the United States, and witnesses whose depositions are taken and the persons taking the same shall severally be entitled to the same fees as are paid for like services in the courts of the United States. Witness fees and mileage shall be paid by the party at whose instance the witnesses appear.


§ 501.729 Sanctions.

(a) Contemptuous conduct – (1) Subject to exclusion or suspension. Contemptuous conduct by any person before an Administrative Law Judge or the Secretary’s designee during any proceeding, including any conference, shall be grounds for the Administrative Law Judge or the Secretary’s designee to:


(i) Exclude that person from such hearing or conference, or any portion thereof; and/or


(ii) If a representative, summarily suspend that person from representing others in the proceeding in which such conduct occurred for the duration, or any portion, of the proceeding.


(2) Adjournment. Upon motion by a party represented by a representative subject to an order of exclusion or suspension, an adjournment shall be granted to allow the retention of a new representative. In determining the length of an adjournment, the Administrative Law Judge or the Secretary’s designee shall consider, in addition to the factors set forth in § 501.737, the availability of another representative for the party or, if the representative was a counsel, of other members of a suspended counsel’s firm.


(b) Deficient filings; leave to cure deficiencies. The Administrative Law Judge, or the Secretary’s designee in the case of a request for review, may in his or her discretion, reject, in whole or in part, any filing that fails to comply with any requirements of this subpart or of any order issued in the proceeding in which the filing was made. Any such filings shall not be part of the record. The Administrative Law Judge or the Secretary’s designee may direct a party to cure any deficiencies and to resubmit the filing within a fixed time period.


(c) Failure to make required filing or to cure deficient filing. The Administrative Law Judge (or the Secretary’s designee during review proceedings) may enter a default pursuant to § 501.716, dismiss the case, decide the particular matter at issue against that person, or prohibit the introduction of evidence or exclude testimony concerning that matter if a person fails:


(1) To make a filing required under this subpart; or


(2) To cure a deficient filing within the time specified by the Administrative Law Judge or the Secretary’s designee pursuant to paragraph (b) of this section.


(d) Failure to make required filing or to cure deficient filing in the case of a request for review. The Secretary’s designee, in any case of a request for review, may decide the issue against that person, or prohibit the introduction of evidence or exclude testimony concerning that matter if a person fails:


(1) To make a filing required under this subpart; or


(2) To cure a deficient filing within the time specified by the Secretary’s designee pursuant to paragraph (b) of this section.


§ 501.730 Depositions upon oral examination.

(a) Procedure. Any party desiring to take the testimony of a witness by deposition shall make a written motion setting forth the reasons why such deposition should be taken including the specific reasons why the party believes the witness may be unable to attend or testify at the hearing; the name and address of the prospective witness; the matters concerning which the prospective witness is expected to be questioned; and the proposed time and place for the taking of the deposition.


(b) Required finding when ordering a deposition. In the discretion of the Administrative Law Judge, an order for deposition may be issued upon a finding that the prospective witness will likely give testimony material to the proceeding, that it is likely the prospective witness will be unable to attend or testify at the hearing because of age, sickness, infirmity, imprisonment or other disability, and that the taking of a deposition will serve the interests of justice.


(c) Contents of order. An order for deposition shall designate by name a deposition officer. The designated officer may be the Administrative Law Judge or any other person authorized to administer oaths by the laws of the United States or of the place where the deposition is to be held. An order for deposition also shall state:


(1) The name of the witness whose deposition is to be taken;


(2) The scope of the testimony to be taken;


(3) The time and place of the deposition;


(4) The manner of recording, preserving and filing the deposition; and


(5) The number of copies, if any, of the deposition and exhibits to be filed upon completion of the deposition.


(d) Procedure at depositions. A witness whose testimony is taken by deposition shall swear or affirm before any questions are put to him or her. Examination and cross-examination of witnesses may proceed as permitted at a hearing. A witness being deposed may have counsel or a representative present during the deposition.


(e) Objections to questions or evidence. Objections to questions or evidence shall be in short form, stating the grounds of objection relied upon. Objections to questions or evidence shall be noted by the deposition officer upon the deposition, but a deposition officer (other than an Administrative Law Judge) shall not have the power to decide on the competency, materiality or relevance of evidence. Failure to object to questions or evidence before the deposition officer shall not be deemed a waiver unless the ground of the objection is one that might have been obviated or removed if presented at that time.


(f) Filing of depositions. The questions asked and all answers or objections shall be recorded or transcribed verbatim, and a transcript shall be prepared by the deposition officer, or under his or her direction. The transcript shall be subscribed by the witness and certified by the deposition officer. The original deposition transcript and exhibits shall be filed with the Administrative Law Judge. A copy of the deposition transcript and exhibits shall be served on the opposing party or parties. The cost of the transcript (including copies) shall be paid by the party requesting the deposition.


§ 501.731 Depositions upon written questions.

(a) Availability. Depositions may be taken and submitted on written questions upon motion of any party. The motion shall include the information specified in § 501.730(a). A decision on the motion shall be governed by § 501.730(b).


(b) Procedure. Written questions shall be filed with the motion. Not later than 10 days after service of the motion and written questions, any party may file objections to such written questions and any party may file cross-questions. When a deposition is taken pursuant to this section no persons other than the witness, representative or counsel to the witness, the deposition officer, and, if the deposition officer does not act as reporter, a reporter, shall be present at the examination of the witness. No party shall be present or represented unless otherwise permitted by order. The deposition officer shall propound the questions and cross-questions to the witness in the order submitted.


(c) Additional requirements. The order for deposition, filing of the deposition, form of the deposition and use of the deposition in the record shall be governed by paragraphs (b) through (g) of § 501.730, except that no cross-examination shall be made.


§ 501.732 Evidence.

The applicable evidentiary standard for proceedings under this subpart is proof by a preponderance of reliable, probative, and substantial evidence. The Administrative Law Judge shall admit any relevant and material oral, documentary, or demonstrative evidence. The Federal Rules of Evidence do not apply, by their own force, to proceedings under this subpart, but shall be employed as general guidelines. The fact that evidence submitted by a party is hearsay goes only to the weight of the evidence and does not affect its admissibility.


(a) Objections and offers of proof – (1) Objections. Objections to the admission or exclusion of evidence must be made on the record and shall be in short form, stating the grounds relied upon. Exceptions to any ruling thereon by the Administrative Law Judge need not be noted at the time of the ruling. Such exceptions will be deemed waived on review by the Secretary’s designee, however, unless raised:


(i) Pursuant to interlocutory review in accordance with § 501.741;


(ii) In a proposed finding or conclusion filed pursuant to § 501.738; or


(iii) In a petition for the Secretary’s designee’s review of an Administrative Law Judge’s decision filed in accordance with § 501.741.


(2) Offers of proof. Whenever evidence is excluded from the record, the party offering such evidence may make an offer of proof, which shall be included in the record. Excluded material shall be retained pursuant to § 501.739(b).


(b) Official notice. An Administrative Law Judge or Secretary’s designee may take official notice of any material fact that might be judicially noticed by a district court of the United States, any matter in the public official records of the Secretary, or any matter that is particularly within the knowledge of the Department as an expert body. If official notice is requested or taken of a material fact not appearing in the evidence in the record, a party, upon timely request to the Administrative Law Judge, shall be afforded an opportunity to establish the contrary.


(c) Stipulations. The parties may, by stipulation, at any stage of the proceeding agree upon any pertinent fact in the proceeding. A stipulation may be received in evidence and, when accepted by the Administrative Law Judge, shall be binding on the parties to the stipulation.


(d) Presentation under oath or affirmation. A witness at a hearing for the purpose of taking evidence shall testify under oath or affirmation.


(e) Presentation, rebuttal and cross-examination. A party is entitled to present its case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as, in the discretion of the Administrative Law Judge, may be required for a full and true disclosure of the facts.


§ 501.733 Evidence: confidential information, protective orders.

(a) Procedure. In any proceeding as defined in § 501.702, a respondent; the Director; any person who is the owner, subject or creator of a document subject to subpoena or which may be introduced as evidence; or any witness who testifies at a hearing may file a motion requesting a protective order to limit from disclosure to other parties or to the public documents or testimony containing confidential information. The motion should include a general summary or extract of the documents without revealing confidential details. If a person seeks a protective order against disclosure to other parties as well as the public, copies of the documents shall not be served on other parties. Unless the documents are unavailable, the person shall file for inspection by the Administrative Law Judge a sealed copy of the documents as to which the order is sought.


(b) Basis for issuance. Documents and testimony introduced in a public hearing are presumed to be public. A motion for a protective order shall be granted only upon a finding that the harm resulting from disclosure would outweigh the benefits of disclosure.


(c) Requests for additional information supporting confidentiality. A person seeking a protective order under paragraph (a) of this section may be required to furnish in writing additional information with respect to the grounds for confidentiality. Failure to supply the information so requested not later than 5 days from the date of receipt by the person of a notice of the information required shall be deemed a waiver of the objection to public disclosure of that portion of the documents to which the additional information relates, unless the Administrative Law Judge shall otherwise order for good cause shown at or before the expiration of such 5-day period.


(d) Confidentiality of documents pending decision. Pending a determination of a motion under this section, the documents as to which confidential treatment is sought and any other documents that would reveal the confidential information in those documents shall be maintained under seal and shall be disclosed only in accordance with orders of the Administrative Law Judge. Any order issued in connection with a motion under this section shall be made public unless the order would disclose information as to which a protective order has been granted, in which case that portion of the order that would reveal the protected information shall not be made public.


§ 501.734 Introducing prior sworn statements of witnesses into the record.

(a) At a hearing, any person wishing to introduce a prior, sworn statement of a witness who is not a party to the proceeding, that is otherwise admissible in the proceeding, may make a motion setting forth the reasons therefor. If only part of a statement is offered in evidence, the Administrative Law Judge may require that all relevant portions of the statement be introduced. If all of a statement is offered in evidence, the Administrative Law Judge may require that portions not relevant to the proceeding be excluded. A motion to introduce a prior sworn statement may be granted if:


(1) The witness is dead;


(2) The witness is out of the United States, unless it appears that the absence of the witness was procured by the party offering the prior sworn statement;


(3) The witness is unable to attend or testify because of age, sickness, infirmity, imprisonment or other disability;


(4) The party offering the prior sworn statement has been unable to procure the attendance of the witness by subpoena; or,


(5) In the discretion of the Administrative Law Judge, it would be desirable, in the interests of justice, to allow the prior sworn statement to be used. In making this determination, due regard shall be given to the presumption that witnesses will testify orally in an open hearing. If the parties have stipulated to accept a prior sworn statement in lieu of live testimony, consideration shall also be given to the convenience of the parties in avoiding unnecessary expense.


§ 501.735 Proposed findings, conclusions and supporting briefs.

(a) Opportunity to file. Before a decision is issued by the Administrative Law Judge, each party shall have an opportunity, reasonable in light of all the circumstances, to file in writing proposed findings and conclusions.


(b) Procedure. Proposed findings of fact must be supported by citations to specific portions of the record. If successive filings are directed, the proposed findings and conclusions of the party assigned to file first shall be set forth in serially numbered paragraphs, and any counter statement of proposed findings and conclusions shall, in addition to any other matter presented, indicate those paragraphs of the proposals already filed as to which there is no dispute. A reply brief may be filed by the party assigned to file first, or, where simultaneous filings are directed, reply briefs may be filed by each party, within the period prescribed therefor by the Administrative Law Judge. No further briefs may be filed except with permission of the Administrative Law Judge.


(c) Time for filing. In any proceeding in which a decision is to be issued:


(1) At the close of each hearing, the Administrative Law Judge shall, by order, after consultation with the parties, prescribe the period within which proposed findings and conclusions and supporting briefs are to be filed. The party directed to file first shall make its initial filing not later than 30 days after the end of the hearing unless the Administrative Law Judge, for good cause shown, permits a different period and sets forth in the order the reasons why the different period is necessary.


(2) The total period within which all such proposed findings and conclusions and supporting briefs and any counter statements of proposed findings and conclusions and reply briefs are to be filed shall be no longer than 90 days after the close of the hearing unless the Administrative Law Judge, for good cause shown, permits a different period and sets forth in an order the reasons why the different period is necessary.


§ 501.736 Authority of Administrative Law Judge.

The Administrative Law Judge shall have authority to do all things necessary and appropriate to discharge his or her duties. No provision of these rules shall be construed to limit the powers of the Administrative Law Judge provided by the Administrative Procedure Act, 5 U.S.C. 556, 557. The powers of the Administrative Law Judge include, but are not limited to:


(a) Administering oaths and affirmations;


(b) Issuing subpoenas authorized by law and revoking, quashing, or modifying any such subpoena;


(c) Receiving relevant evidence and ruling upon the admission of evidence and offers of proof;


(d) Regulating the course of a proceeding and the conduct of the parties and their representatives;


(e) Holding prehearing and other conferences as set forth in § 501.726 and requiring the attendance at any such conference of at least one representative of each party who has authority to negotiate concerning the resolution of issues in controversy;


(f) Subject to any limitations set forth elsewhere in this subpart, considering and ruling on all procedural and other motions;


(g) Upon notice to all parties, reopening any hearing prior to the issuance of a decision;


(h) Requiring production of records or any information relevant to any act or transaction subject to a hearing under this subpart, and imposing sanctions available under Federal Rule of Civil Procedure 37(b)(2) (Fed. R. Civ. P. 37(b)(2), 28 U.S.C.) for a party’s failure to comply with discovery requests;


(i) Establishing time, place, and manner limitations on the attendance of the public and the media for any hearing; and


(j) Setting fees and expenses for witnesses, including expert witnesses.


§ 501.737 Adjustments of time, postponements and adjournments.

(a) Availability. Except as otherwise provided by law, the Administrative Law Judge or the Secretary’s designee, as appropriate, at any time prior to the filing of his or her decision, may, for good cause and in the interest of justice, modify any time limit prescribed by this subpart and may, consistent with paragraph (b) of this section, postpone or adjourn any hearing.


(b) Limitations on postponements, adjournments and adjustments. A hearing shall begin at the time and place ordered, provided that, within the limits provided, the Administrative Law Judge or the Secretary’s designee, as appropriate, may for good cause shown postpone the commencement of the hearing or adjourn a convened hearing for a reasonable period of time.


(1) Additional considerations. In considering a motion for postponement of the start of a hearing, adjournment once a hearing has begun, or extensions of time for filing papers, the Administrative Law Judge or the Secretary’s designee, as appropriate, shall consider, in addition to any other factors:


(i) The length of the proceeding to date;


(ii) The number of postponements, adjournments or extensions already granted;


(iii) The stage of the proceedings at the time of the request; and


(iv) Any other matter as justice may require.


(2) Time limit. Postponements, adjournments or extensions of time for filing papers shall not exceed 21 days unless the Administrative Law Judge or the Secretary’s designee, as appropriate, states on the record or sets forth in a written order the reasons why a longer period of time is necessary.


§ 501.738 Disqualification and withdrawal of Administrative Law Judge.

(a) Notice of disqualification. If at any time an Administrative Law Judge or Secretary’s designee believes himself or herself to be disqualified from considering a matter, the Administrative Law Judge or Secretary’s designee, as appropriate, shall issue a notice stating that he or she is withdrawing from the matter and setting forth the reasons therefor.


(b) Motion for Withdrawal. Any party who has a reasonable, good faith basis to believe an Administrative Law Judge or Secretary’s designee has a personal bias, or is otherwise disqualified from hearing a case, may make a motion to the Administrative Law Judge or Secretary’s designee, as appropriate, that the Administrative Law Judge or Secretary’s designee withdraw. The motion shall be accompanied by a statement subject to 18 U.S.C. 1001 setting forth in detail the facts alleged to constitute grounds for disqualification. If the Administrative Law Judge or Secretary’s designee finds himself or herself qualified, he or she shall so rule and shall continue to preside over the proceeding.


§ 501.739 Record in proceedings before Administrative Law Judge; retention of documents; copies.

(a) Recordation. Unless otherwise ordered by the Administrative Law Judge, all hearings shall be recorded and a written transcript thereof shall be prepared.


(1) Availability of a transcript. Transcripts of hearings shall be available for purchase.


(2) Transcript correction. Prior to the filing of post-hearing briefs or proposed findings and conclusions, or within such earlier time as directed by the Administrative Law Judge, a party or witness may make a motion to correct the transcript. Proposed corrections of the transcript may be submitted to the Administrative Law Judge by stipulation pursuant to § 501.732(c), or by motion. Upon notice to all parties to the proceeding, the Administrative Law Judge may, by order, specify corrections to the transcript.


(b) Contents of the record. The record of each hearing shall consist of:


(1) The Order Instituting Proceedings, Answer to Order Instituting Proceedings, Notice of Hearing and any amendments thereto;


(2) Each application, motion, submission or other paper, and any amendments, motions, objections, and exceptions to or regarding them;


(3) Each stipulation, transcript of testimony, interrogatory, deposition, and document or other item admitted into evidence;


(4) With respect to a request to disqualify an Administrative Law Judge or to allow the Administrative Law Judge’s withdrawal under § 501.738, each affidavit or transcript of testimony taken and the decision made in connection with the request;


(5) All proposed findings and conclusions;


(6) Each written order issued by the Administrative Law Judge; and


(7) Any other document or item accepted into the record by the Administrative Law Judge.


(c) Retention of documents not admitted. Any document offered as evidence but excluded, and any document marked for identification but not offered as an exhibit, shall not be part of the record. The Administrative Law Judge shall retain any such document until the later of the date the proceeding becomes final, or the date any judicial review of the final proceeding is no longer available.


(d) Substitution of copies. A true copy of a document may be substituted for any document in the record or any document retained pursuant to paragraph (c) of this section.


§ 501.740 Decision of Administrative Law Judge.

The Administrative Law Judge shall prepare a decision that constitutes his or her final disposition of the proceedings.


(a) Content. (1) The Administrative Law Judge shall determine whether or not the respondent has violated any provision of parts 500 and 515 of this chapter or the provisions of any license, ruling, regulation, order, direction or instruction issued by or under the authority of the Secretary pursuant to part 500 or 515 of this chapter or otherwise under the Trading with the Enemy Act.


(2) The Administrative Law Judge’s decision shall include findings and conclusions, and the reasons or basis therefor, as to all the material issues of fact, law or discretion presented on the record.


(3) (i) Upon a finding of violation, the Administrative Law Judge shall award an appropriate monetary civil penalty in an amount consistent with the Penalty Guidelines published by the Director.


(ii) Notwithstanding paragraph (a)(3)(i) of this section, the Administrative Law Judge:


(A) Shall provide an opportunity for a respondent to assert his or her inability to pay a penalty, or financial hardship, by filing with the Administrative Law Judge a financial disclosure statement subject to 18 U.S.C. 1001 that sets forth in detail the basis for the financial hardship or the inability to pay; and


(B) Shall consider any such filing in determining the appropriate monetary civil penalty.


(b) Administrative Law Judge’s decision – (1) Service. The Administrative Law Judge shall serve his or her decision on the respondent and on the Director through the Office of Chief Counsel, and shall file a copy of the decision with the Secretary’s designee.


(2) Filing of report with the Secretary’s designee. If the respondent or Director files a petition for review pursuant to § 501.741, or upon a request from the Secretary’s designee, the Administrative Law Judge shall file his or her report with the Secretary’s designee not later than 20 days after service of his or her decision on the parties. The report shall consist of the record, including the Administrative Law Judge’s decision, and any petition from the respondent or the Director seeking review.


(3) Correction of errors. Until the Administrative Law Judge’s report has been directed for review by the Secretary’s designee or, in the absence of a direction for review, until the decision has become a final order, the Administrative Law Judge may correct clerical errors and errors arising through oversight or inadvertence in decisions, orders, or other parts of the record.


(c) Administrative Law Judge’s decision final unless review directed. Unless the Secretary’s designee determines to review a decision in accordance with § 501.741(a)(1), the decision of the Administrative Law Judge shall become the final decision of the Department.


(d) Penalty awarded. The Director is charged with implementing all final decisions of the Department and, upon a finding of violation and/or award of a civil monetary penalty, shall carry out the necessary steps to close the action.


§ 501.741 Review of decision or ruling.

(a) Availability. (1)(i) Review of the decision of the Administrative Law Judge by the Secretary’s designee is not a right. The Secretary’s designee may, in his or her discretion, review the decision of the Administrative Law Judge on the petition of either the respondent or the Director, or upon his or her own motion. The Secretary’s designee shall determine whether to review a decision:


(A) If a petition for review has been filed by the respondent or the Director, not later than 30 days after that date the Administrative Law Judge filed his or her report with the Secretary’s designee pursuant to paragraph (b)(2) of this section; or


(B) If no petition for review has been filed by the respondent or the Director, not later than 40 days after the date the Administrative Law Judge filed his or her decision with the Secretary’s designee pursuant to paragraph (b)(1) of this section.


(ii) In determining whether to review a decision upon petition of the respondent or the Director, the Secretary’s designee shall consider whether the petition for review makes a reasonable showing that:


(A) A prejudicial error was committed in the conduct of the proceeding; or


(B) The decision embodies:


(1) A finding or conclusion of material fact that is clearly erroneous;


(2) A conclusion of law that is erroneous; or


(3) An exercise of discretion or decision of law or policy that is important and that the Secretary’s designee should review.


(2) Interlocutory review of ruling. The Secretary’s designee shall review any ruling of an Administrative Law Judge involving privileged or confidential material that is the subject of a petition for review. See § 501.725.


(b) Filing. Either the respondent or the Director, when adversely affected or aggrieved by the decision or ruling of the Administrative Law Judge, may seek review by the Secretary’s designee by filing a petition for review. Any petition for review shall be filed with the Administrative Law Judge within 10 days after service of the Administrative Law Judge’s decision or the issuance of a ruling involving privileged or confidential material.


(c) Contents. The petition shall state why the Secretary’s designee should review the Administrative Law Judge’s decision or ruling, including: Whether the Administrative Law Judge’s decision or ruling raises an important question of law, policy or discretion; whether review by the Secretary’s designee will resolve a question about which the Department’s Administrative Law Judges have rendered differing opinions; whether the Administrative Law Judge’s decision or ruling is contrary to law or Department precedent; whether a finding of material fact is not supported by a preponderance of the evidence; or whether a prejudicial error of procedure or an abuse of discretion was committed. A petition should concisely state the portions of the decision or ruling for which review is sought. A petition shall not incorporate by reference a brief or legal memorandum.


(d) When filing effective. A petition for review is filed when received by the Administrative Law Judge.


(e) Statements in opposition to petition. Not later than 8 days after the filing of a petition for review, either the respondent or the Director may file a statement in opposition to a petition. A statement in opposition to a petition for review shall be filed in the manner specified in this section for filing of petitions for review. Statements in opposition shall concisely state why the Administrative Law Judge’s decision or ruling should not be reviewed with respect to each portion of the petition to which it is addressed.


(f) Number of copies. An original and three copies of a petition or a statement in opposition to a petition shall be filed with the Administrative Law Judge.


(g) Prerequisite to judicial review. Pursuant to section 704 of the Administrative Procedure Act, 5 U.S.C. 704, a petition for review by the Secretary’s designee of an Administrative Law Judge decision or ruling is a prerequisite to the seeking of judicial review of a final order entered pursuant to such decision or ruling.


§ 501.742 Secretary’s designee’s consideration of decisions by Administrative Law Judges.

(a) Scope of review. The Secretary’s designee may affirm, reverse, modify, set aside or remand for further proceedings, in whole or in part, a decision or ruling by an Administrative Law Judge and may make any findings or conclusions that in his or her judgment are proper and on the basis of the record and such additional evidence as the Secretary’s designee may receive in his or her discretion.


(b) Summary affirmance. The Secretary’s designee may summarily affirm an Administrative Law Judge’s decision or ruling based upon the petition for review and any response thereto, without further briefing, if he or she finds that no issue raised in the petition for review warrants further consideration.


§ 501.743 Briefs filed with the Secretary’s designee.

(a) Briefing schedule order. If review of a determination is mandated by judicial order or whenever the Secretary’s designee reviews a decision or ruling, the Secretary’s designee shall, unless such review results in summary affirmance pursuant to § 501.742(b), issue a briefing schedule order directing the parties to file opening briefs and specifying particular issues, if any, as to which briefing should be limited or directed. Unless otherwise provided, opening briefs shall be filed not later than 40 days after the date of the briefing schedule order. Opposition briefs shall be filed not later than 30 days after the date opening briefs are due. Reply briefs shall be filed not later than 14 days after the date opposition briefs are due. No briefs in addition to those specified in the briefing schedule order may be filed without permission of the Secretary’s designee. The briefing schedule order shall be issued not later than 21 days after the later of:


(1) The last day permitted for filing a brief in opposition to a petition for review pursuant to § 501.741(e); or


(2) Receipt by the Secretary’s designee of the mandate of a court with respect to a judicial remand.


(b) Contents of briefs. Briefs shall be confined to the particular matters at issue. Each exception to the findings or conclusions being reviewed shall be stated succinctly. Exceptions shall be supported by citation to the relevant portions of the record, including references to the specific pages relied upon, and by concise argument including citation of such statutes, decisions and other authorities as may be relevant. If the exception relates to the admission or exclusion of evidence, the substance of the evidence admitted or excluded shall be set forth in the brief, in an appendix thereto, or by citation to the record. If the exception relates to interlocutory review, there is no requirement to reference pages of the transcript. Reply briefs shall be confined to matters in opposition briefs of other parties.


(c) Length limitation. Opening and opposition briefs shall not exceed 30 pages and reply briefs shall not exceed 20 pages, exclusive of pages containing the table of contents, table of authorities, and any addendum, except with permission of the Secretary’s designee.


§ 501.744 Record before the Secretary’s designee.

The Secretary’s designee shall determine each matter on the basis of the record and such additional evidence as the Secretary’s designee may receive in his or her discretion. In any case of interlocutory review, the Administrative Law Judge shall direct that a transcript of the relevant proceedings be prepared and forwarded to the Secretary’s designee.


(a) Contents of the record. In proceedings for final decision before the Secretary’s designee the record shall consist of:


(1) All items that are part of the record in accordance with § 501.739;


(2) Any petitions for review, cross-petitions or oppositions;


(3) All briefs, motions, submissions and other papers filed on appeal or review; and


(4) Any other material of which the Secretary’s designee may take administrative notice.


(b) Review of documents not admitted. Any document offered in evidence but excluded by the Administrative Law Judge and any document marked for identification but not offered as an exhibit shall not be considered a part of the record before the Secretary’s designee on review but shall be transmitted to the Secretary’s designee if he or she so requests. In the event that the Secretary’s designee does not request the document, the Administrative Law Judge shall retain the document not admitted into the record until the later of:


(1) The date upon which the Secretary’s designee’s order becomes final; or


(2) The conclusion of any judicial review of that order.


§ 501.745 Orders and decisions: signature, date and public availability.

(a) Signature required. All orders and decisions of the Administrative Law Judge or Secretary’s designee shall be signed.


(b) Date of entry of orders. The date of entry of an order by the Administrative Law Judge or Secretary’s designee shall be the date the order is signed. Such date shall be reflected in the caption of the order, or if there is no caption, in the order itself.


(c) Public availability of orders. (1) In general, any final order of the Department shall be made public. Any supporting findings or opinions relating to a final order shall be made public at such time as the final order is made public.


(2) Exception. Any final order of the Administrative Law Judge or Secretary’s designee pertaining to an application for confidential treatment shall only be available to the public in accordance with § 501.725(b)(3).


§ 501.746 Referral to United States Department of Justice; administrative collection measures.

In the event that the respondent does not pay any penalty imposed pursuant to this part within 30 calendar days of the mailing of the written notice of the imposition of the penalty, the matter may be referred for administrative collection measures or to the United States Department of Justice for appropriate action to recover the penalty in a civil suit in a Federal district court.


§ 501.747 Procedures on remand of decisions.

Either an Administrative Law Judge or a Secretary’s designee, as appropriate, shall reconsider any Department decision on judicial remand to the Department. The rules of practice contained in this subpart shall apply to all proceedings held on judicial remand.


Subpart E – Procedures


Source:62 FR 45101, Aug. 25, 1997, unless otherwise noted. Redesignated at 68 FR 53642, Sept. 11, 2003.

§ 501.801 Licensing.

(a) General licenses. General licenses may be issued authorizing, under appropriate terms and conditions, certain types of transactions that are subject to the prohibitions contained in this chapter. General licenses also may be issued authorizing, under appropriate terms and conditions, certain types of transactions that are subject to prohibitions contained in economic sanctions programs the implementation and administration of which have been delegated to the Director of the Office of Foreign Assets Control (OFAC) but which are not yet codified in this chapter. General licenses are set forth in subpart E of each part contained in this chapter or made available on OFAC’s website: https://www.treasury.gov/resourcecenter/sanctions/Programs/Pages/Programs.aspx. It is the policy of OFAC not to grant applications for specific licenses authorizing transactions to which the provisions of a general license are applicable. Persons availing themselves of certain general licenses may be required to file reports and statements in accordance with the instructions specified in those licenses. Failure to file timely all required information in such reports or statements may nullify the authorization otherwise provided by the general license and result in apparent violations of the applicable prohibitions that may be subject to OFAC enforcement action.


(b) Specific licenses – (1) General course of procedure. Transactions subject to the prohibitions contained in this chapter, or to prohibitions the implementation and administration of which have been otherwise delegated to the OFAC Director, that are not authorized by general license may be effected only under specific license.


(2) Applications for specific licenses. Applications for specific licenses to engage in any transactions prohibited by or pursuant to this chapter, or sanctions programs that have been otherwise delegated to the OFAC Director for implementation and administration, must be signed, either manually or electronically, and filed through OFAC’s Reporting and License Application Forms page (https://licensing.ofac.treas.gov/) or, if that option is unavailable, by mail, addressed to the Office of Foreign Assets Control, Licensing Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman’s Bank Building, Washington, DC 20220. Applications for the unblocking of funds may be submitted via OFAC’s Reporting and License Application Forms page (https://licensing.ofac.treas.gov/) or, if that option is unavailable, by using Form TD-F 90-22.54, “Application for the Release of Blocked Funds,” or via a submission that otherwise contains all of the information provided for in Form TD-F 90-22.54. Form TD-F 90-22.54 may be obtained from OFAC’s Reporting and License Application Forms page, or by mail at the address above.


(i) Additional conditions. Applicants should submit only one copy of a specific license application to OFAC; submitting multiple copies may result in processing delays. Any person having an interest in a transaction or proposed transaction may file an application for a specific license authorizing such a transaction.


(ii) Information to be supplied. The applicant must supply all information specified by relevant instructions (available on OFAC’s Reporting and License Application Forms page at https://licensing.ofac.treas.gov) and/or forms, and must fully disclose the names of all parties who are concerned with or interested in the proposed transaction. If the application is filed by an agent, the agent must disclose the name of his or her principal(s). Such documents as may be relevant shall be attached to each application as a part of such application, whether filed electronically or by mail, except that documents previously filed with OFAC may, where appropriate, be incorporated by reference in such application. Applicants may be required to furnish such further information as is deemed necessary to assist OFAC in making a determination. Any applicant or other party in interest desiring to present additional information may do so at any time before or after OFAC makes its decision with respect to the application. In unique circumstances, OFAC may determine that an oral presentation regarding a license application would assist in OFAC’s review of the issues involved. Any requests to make such an oral presentation must be submitted in writing to the attention of the Director, but are rarely granted.


(3) Issuance of specific license. Specific licenses normally will be issued by OFAC. Specific licenses also may be issued by the Secretary of the Treasury acting directly or through any specifically designated person, agency, or instrumentality.


(4) Reports under specific licenses. As a condition for the issuance of any specific license, the licensee may be required to file reports with respect to the transactions authorized by the specific license in such form and at such times and places as may be prescribed in the license or otherwise. Reports should be sent in accordance with the instructions provided in the applicable specific license.


(5) Effect of denial. The denial of a specific license does not preclude the reconsideration of an application or the filing of a further application. The applicant or any other party in interest may at any time request, by written correspondence, reconsideration of the denial of an application on the basis of new facts or changed circumstances.


(6) Rules governing availability of information. OFAC records are made available to the public in accordance with the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the provisions of 31 CFR part 1. See 31 CFR 1.5 for provisions pertaining to business information. License applications submitted to OFAC and specific licenses issued by OFAC are subject to the FOIA and generally will be released upon the receipt of a valid FOIA request, unless OFAC determines that such information should be withheld in accordance with an applicable FOIA exemption.



Note 1 to paragraph (b)(6):

OFAC views information submitted in furtherance of an application for a specific license pursuant to this paragraph (b) to be required information for purposes of Exemption 4 of the FOIA.


[84 FR 29061, June 21, 2019]


§ 501.802 Decisions.

The Office of Foreign Assets Control will advise each applicant of the decision respecting filed applications. The decision of the Office of Foreign Assets Control acting on behalf of the Secretary of the Treasury with respect to an application shall constitute final agency action.


§ 501.803 Amendment, modification, or revocation.

Except as otherwise provided by law, the provisions of each part of this chapter and any rulings, licenses (whether general or specific), authorizations, instructions, orders, or forms issued thereunder may be amended, modified or revoked at any time.


[63 FR 35809, July 1, 1998]


§ 501.804 Rulemaking.

(a) All rules and other public documents are issued by the Director of the Office of Foreign Assets Control. In general, rulemaking by the Office of Foreign Assets Control involves foreign affairs functions of the United States, and for that reason is exempt from the requirements under the Administrative Procedure Act (5 U.S.C. 553) for notice of proposed rulemaking, opportunity for public comment, and delay in effective date.


(b) Any interested person may petition the Director of the Office of Foreign Assets Control in writing for the issuance, amendment, or repeal of any rule.


§ 501.805 Rules governing availability of information.

(a) The records of the Office of Foreign Assets Control which are required by the Freedom of Information Act (5 U.S.C. 552) to be made available to the public shall be made available in accordance with the definitions, procedures, payment of fees, and other provisions of the regulations on the Disclosure of Records of the Departmental Offices and of other bureaus and offices of the Department of the Treasury issued under 5 U.S.C. 552 and published at 31 CFR part 1.



Note to paragraph § 501.805(a):

Records or information obtained or created in the implementation of part 598 of this chapter are not subject to disclosure under section 552(a)(3) of the Freedom of Information Act. See § 598.802 of this chapter.


(b) The records of the Office of Foreign Assets Control which are required by the Privacy Act (5 U.S.C. 552a) to be made available to an individual shall be made available in accordance with the definitions, procedures, requirements for payment of fees, and other provisions of the Regulations on the Disclosure of Records of the Departmental Offices and of other bureaus and offices of the Department of the Treasury issued under 5 U.S.C. 552a and published at 31 CFR part 1.


(c) Any form issued for use in connection with this chapter may be obtained in person or by writing to the Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW. – Annex, Washington, DC 20220, or by calling 202/622-2480.


(d) Certain Civil Penalties Information. (1) After the conclusion of a civil penalties proceeding that results in either the imposition of a civil monetary penalty or an informal settlement, OFAC shall make available to the public certain information on a routine basis, not less frequently than monthly, as follows:


(i) In each such proceeding against an entity, OFAC shall make available to the public


(A) The name and address of the entity involved,


(B) The sanctions program involved,


(C) A brief description of the violation or alleged violation,


(D) A clear indication whether the proceeding resulted in an informal settlement or in the imposition of a penalty,


(E) An indication whether the entity voluntarily disclosed the violation or alleged violation to OFAC, and


(F) The amount of the penalty imposed or the amount of the agreed settlement.


(ii) In such proceedings against individuals, OFAC shall release on an aggregate basis


(A) The number of penalties imposed and informal settlements reached,


(B) The sanctions programs involved,


(C) A brief description of the violations or alleged violations,


(D) A clear indication whether the proceedings resulted in informal settlements, in the imposition of penalties, or in administrative hearing requests pursuant to the Trading With the Enemy Act (TWEA), 50 U.S.C. 5(b), and


(E) The amounts of the penalties imposed and the amounts of the agreed settlements.


(2) The medium through which information will be released is OFAC’s website at http://www.treas.gov/ofac.


(3) The information made available pursuant to paragraph (d)(1) of this section shall not include the following:


(i) The name of any violator or alleged violator who is an individual.


(ii) Records or information obtained or created in the implementation of part 598 of this chapter.


(4) On a case-by-case basis, OFAC may release additional information concerning a particular civil penalties proceeding.


[62 FR 45101, Aug. 25, 1997, as amended at 65 FR 41335, July 5, 2000; 68 FR 6822, Feb. 11, 2003]


§ 501.806 Procedures for unblocking funds believed to have been blocked due to mistaken identity.

When a transaction results in the blocking of funds at a financial institution pursuant to the applicable regulations of this chapter 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 following administrative procedures:


(a) Any person who is a party to the transaction may request the release of funds which the party believes to have been blocked due to mistaken identity.


(b) Requests to release funds which a party believes to have been blocked due to mistaken identity must be made in writing and addressed to the Office of Foreign Assets Control, Sanctions Compliance & Evaluation Division, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman’s Bank Building, Washington, DC 20220, or sent by email to the Sanctions Compliance & Evaluation Division at [email protected]


(c) The written request to release funds must include the name, address, telephone number, and (where available) fax number of the party seeking the release of the funds. For individuals, the inclusion of a social security number is voluntary but will facilitate resolution of the request. For corporations or other entities, the application should include its principal place of business, the state of incorporation or organization, and the name and telephone number of the appropriate person to contact regarding the application.


(d) A request to release funds should include the following information, where known, concerning the transaction:


(1) The name of the financial institution in which the funds are blocked;


(2) The amount blocked;


(3) The date of the blocking;


(4) The identity of the original remitter of the funds and any intermediary financial institutions;


(5) The intended beneficiary of the blocked transfer;


(6) A description of the underlying transaction including copies of related documents (e.g., invoices, bills of lading, promissory notes, etc.);


(7) The nature of the applicant’s interest in the funds; and


(8) A statement of the reasons why the applicant believes the funds were blocked due to mistaken identity.


(e) Upon receipt of the materials required by paragraph (d) of this section, OFAC may request additional material from the applicant concerning the transaction pursuant to § 501.602.


(f) Following review of all applicable submissions, the Director of the Office of Foreign Assets Control will determine whether to release the funds. In the event the Director determines that the funds should be released, the Office of Foreign Assets Control will direct the financial institution to return the funds to the appropriate party.


(g) For purposes of this section, the term “financial institution” shall include a banking institution, depository institution or United States depository institution, domestic bank, financial institution or U.S. financial institution, as those terms are defined in the applicable part of this chapter.


[62 FR 45101, Aug. 25, 1997, as amended at 62 FR 52495, Oct. 8, 1997; 84 FR 29062, June 21, 2019]


§ 501.807 Procedures governing delisting from the Specially Designated Nationals and Blocked Persons List.

A person may seek administrative reconsideration of his, her or its designation or that of a vessel as blocked, or assert that the circumstances resulting in the designation no longer apply, and thus seek to have the designation rescinded pursuant to the following administrative procedures:


(a) A person blocked under the provisions of any part of this chapter, including a specially designated national, specially designated terrorist, or specially designated narcotics trafficker (collectively,“a blocked person”), or a person owning a majority interest in a blocked vessel may submit arguments or evidence that the person believes establishes that insufficient basis exists for the designation. The blocked person also may propose remedial steps on the person’s part, such as corporate reorganization, resignation of persons from positions in a blocked entity, or similar steps, which the person believes would negate the basis for designation. A person owning a majority interest in a blocked vessel may propose the sale of the vessel, with the proceeds to be placed into a blocked interest-bearing account after deducting the costs incurred while the vessel was blocked and the costs of the sale. This submission must be made in writing and addressed to the Director, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue, NW. – Annex, Washington, DC 20220.


(b) The information submitted by the blocked person seeking unblocking or by a person seeking the unblocking of a vessel will be reviewed by the Office of Foreign Assets Control, which may request clarifying, corroborating, or other additional information.


(c) A blocked person seeking unblocking or a person seeking the unblocking of a vessel may request a meeting with the Office of Foreign Assets Control; however, such meetings are not required, and the office may, at its discretion, decline to conduct such meetings prior to completing a review pursuant to this section.


(d) After the Office of Foreign Assets Control has conducted a review of the request for reconsideration, it will provide a written decision to the blocked person or person seeking the unblocking of a vessel.


[64 FR 5614, Feb. 4, 1999]


§ 501.808 License application and other procedures applicable to economic sanctions programs.

Upon submission to the Office of Management and Budget of an amendment to the overall burden hours for the information collections imposed under this part, the license application and other procedures set forth in this subpart are applicable to economic sanctions programs for which implementation and administration have been delegated to the Office of Foreign Assets Control.


Subpart F – Paperwork Reduction Act


Source:62 FR 45101, Aug. 25, 1997, unless otherwise noted. Redesignated at 68 FR 53642, Sept. 11, 2003.

§ 501.901 Paperwork Reduction Act notice.

The information collection requirements in subparts C and D have been approved by the Office of Management and Budget (“OMB”) under the Paperwork Reduction Act (44 U.S.C. 3507(j)) and assigned control number 1505-0164. 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.


Appendix A to Part 501 – Economic Sanctions Enforcement Guidelines.


Note:

This appendix provides a general framework for the enforcement of all economic sanctions programs administered by the Office of Foreign Assets Control (OFAC).


I. Definitions

A. Apparent violation means conduct that constitutes an actual or possible violation of U.S. economic sanctions laws, including the International Emergency Economic Powers Act (IEEPA), the Trading With the Enemy Act (TWEA), the Foreign Narcotics Kingpin Designation Act, and other statutes administered or enforced by OFAC, as well as Executive orders, regulations, orders, directives, or licenses issued pursuant thereto.


B. Applicable schedule amount means:


1. $1,000 with respect to a transaction valued at less than $1,000;


2. $10,000 with respect to a transaction valued at $1,000 or more but less than $10,000;


3. $25,000 with respect to a transaction valued at $10,000 or more but less than $25,000;


4. $50,000 with respect to a transaction valued at $25,000 or more but less than $50,000;


5. $100,000 with respect to a transaction valued at $50,000 or more but less than $100,000;


6. $200,000 with respect to a transaction valued at $100,000 or more but less than $200,000;


7. The statutory maximum civil penalty per violation of IEEPA listed in section V.B.2.a.v. of this appendix with respect to a transaction valued at $200,000 or more.


C. OFAC means the Department of the Treasury’s Office of Foreign Assets Control.


D. Penalty is the final civil penalty amount imposed in a Penalty Notice.


E. Proposed penalty is the civil penalty amount set forth in a Pre-Penalty Notice.


F. Regulator means any Federal, State, local or foreign official or agency that has authority to license or examine an entity for compliance with federal, state, or foreign law.


G. Subject Person means an individual or entity subject to any of the sanctions programs administered or enforced by OFAC.


H. Transaction value means the dollar value of a subject transaction. In export and import cases, the transaction value generally will be the domestic value in the United States of the goods, technology, or services sought to be exported from or imported into the United States, as demonstrated by commercial invoices, bills of lading, signed Customs declarations, or similar documents. In cases involving seizures by U.S. Customs and Border Protection (CBP), the transaction value generally will be the domestic value as determined by CBP. If the apparent violation at issue is a prohibited dealing in blocked property by a Subject Person, the transaction value generally will be the dollar value of the underlying transaction involved, such as the value of the property dealt in or the amount of the funds transfer that a financial institution failed to block or reject. Where the transaction value is not otherwise ascertainable, OFAC may consider the market value of the goods or services that were the subject of the transaction, the economic benefit conferred on the sanctioned party, and/or the economic benefit derived by the Subject Person from the transaction, in determining transaction value. For purposes of these Guidelines, “transaction value” will not necessarily have the same meaning, nor be applied in the same manner, as that term is used for import valuation purposes at 19 CFR 152.103.


I. Voluntary self-disclosure means self-initiated notification to OFAC of an apparent violation by a Subject Person that has committed, or otherwise participated in, an apparent violation of a statute, Executive order, or regulation administered or enforced by OFAC, prior to or at the same time that OFAC, or any other federal, state, or local government agency or official, discovers the apparent violation or another substantially similar apparent violation. For these purposes, “substantially similar apparent violation” means an apparent violation that is part of a series of similar apparent violations or is related to the same pattern or practice of conduct. Notification of an apparent violation to another government agency (but not to OFAC) by a Subject Person, which is considered a voluntary self-disclosure by that agency, may be considered a voluntary self-disclosure by OFAC, based on a case-by-case assessment. Notification to OFAC of an apparent violation is not a voluntary self-disclosure if: a third party is required to and does notify OFAC of the apparent violation or a substantially similar apparent violation because a transaction was blocked or rejected by that third party (regardless of when OFAC receives such notice from the third party and regardless of whether the Subject Person was aware of the third party’s disclosure); the disclosure includes false or misleading information; the disclosure (when considered along with supplemental information provided by the Subject Person) is materially incomplete; the disclosure is not self-initiated (including when the disclosure results from a suggestion or order of a federal or state agency or official); or, when the Subject Person is an entity, the disclosure is made by an individual in a Subject Person entity without the authorization of the entity’s senior management. Responding to an administrative subpoena or other inquiry from, or filing a license application with, OFAC is not a voluntary self-disclosure. In addition to notification, a voluntary self-disclosure must include, or be followed within a reasonable period of time by, a report of sufficient detail to afford a complete understanding of an apparent violation’s circumstances, and should also be followed by responsiveness to any follow-up inquiries by OFAC. (As discussed further below, a Subject Person’s level of cooperation with OFAC is an important factor in determining the appropriate enforcement response to an apparent violation even in the absence of a voluntary self-disclosure as defined herein; disclosure by a Subject Person generally will result in mitigation insofar as it represents cooperation with OFAC’s investigation.)


II. Types of Responses to Apparent Violations

Depending on the facts and circumstances of a particular case, an OFAC investigation may lead to one or more of the following actions:


A. No Action. If OFAC determines that there is insufficient evidence to conclude that a violation has occurred and/or, based on an analysis of the General Factors outlined in Section III of these Guidelines, concludes that the conduct does not rise to a level warranting an administrative response, then no action will be taken. In those cases in which OFAC is aware that the Subject Person has knowledge of OFAC’s investigation, OFAC generally will issue a letter to the Subject Person indicating that the investigation is being closed with no administrative action being taken. A no-action determination represents a final determination as to the apparent violation, unless OFAC later learns of additional related violations or other relevant facts.


B. Request Additional Information. If OFAC determines that additional information regarding the apparent violation is needed, it may request further information from the Subject Person or third parties, including through an administrative subpoena issued pursuant to 31 CFR 501.602. In the case of an institution subject to regulation where OFAC has entered into a Memorandum of Understanding (MOU) with the Subject Person’s regulator, OFAC will follow the procedures set forth in such MOU regarding consultation with the regulator. Even in the absence of an MOU, OFAC may seek relevant information about a regulated institution and/or the conduct constituting the apparent violation from the institution’s federal, state, or foreign regulator. Upon receipt of information determined to be sufficient to assess the apparent violation, OFAC will decide, based on an analysis of the General Factors outlined in Section III of these Guidelines, whether to pursue further enforcement action or whether some other response to the apparent violation is appropriate.


C. Cautionary Letter: If OFAC determines that there is insufficient evidence to conclude that a violation has occurred or that a Finding of Violation or a civil monetary penalty is not warranted under the circumstances, but believes that the underlying conduct could lead to a violation in other circumstances and/or that a Subject Person does not appear to be exercising due diligence in assuring compliance with the statutes, Executive orders, and regulations that OFAC enforces, OFAC may issue a cautionary letter, which may convey OFAC’s concerns about the underlying conduct and/or the Subject Person’s OFAC compliance policies, practices and/or procedures. A cautionary letter represents a final enforcement response to the apparent violation, unless OFAC later learns of additional related violations or other relevant facts, but does not constitute a final agency determination as to whether a violation has occurred.


D. Finding of Violation: If OFAC determines that a violation has occurred and considers it important to document the occurrence of a violation and, based on an analysis of the General Factors outlined in Section III of these Guidelines, concludes that the Subject Person’s conduct warrants an administrative response but that a civil monetary penalty is not the most appropriate response, OFAC may issue a Finding of Violation that identifies the violation. A Finding of Violation may also convey OFAC’s concerns about the violation and/or the Subject Person’s OFAC compliance policies, practices and/or procedures, and/or identify the need for further compliance steps to be taken. A Finding of Violation represents a final enforcement response to the violation, unless OFAC later learns of additional related violations or other relevant facts, and constitutes a final agency determination that a violation has occurred. A Finding of Violation will afford the Subject Person an opportunity to respond to OFAC’s determination that a violation has occurred before that determination becomes final. In the event a Subject Person so responds, the initial Finding of Violation will not constitute a final agency determination that a violation has occurred. In such cases, after considering the response received, OFAC will inform the Subject Person of its final enforcement response to the apparent violation.


E. Civil Monetary Penalty. If OFAC determines that a violation has occurred and, based on an analysis of the General Factors outlined in Section III of these Guidelines, concludes that the Subject Person’s conduct warrants the imposition of a monetary penalty, OFAC may impose a civil monetary penalty. Civil monetary penalty amounts will be determined as discussed in Section V of these Guidelines. The imposition of a civil monetary penalty constitutes a final agency determination that a violation has occurred and represents a final civil enforcement response to the violation. OFAC will afford the Subject Person an opportunity to respond to OFAC’s determination that a violation has occurred before a final penalty is imposed.


F. Criminal Referral. In appropriate circumstances, OFAC may refer the matter to appropriate law enforcement agencies for criminal investigation and/or prosecution. Apparent sanctions violations that OFAC has referred for criminal investigation and/or prosecution also may be subject to OFAC civil penalty or other administrative action.


G. Other Administrative Actions. In addition to or in lieu of other administrative actions, OFAC may also take the following administrative actions in response to an apparent violation:


1. License Denial, Suspension, Modification, or Revocation. OFAC authorizations to engage in a transaction (including the release of blocked funds) pursuant to a general or specific license may be withheld, denied, suspended, modified, or revoked in response to an apparent violation.


2. Cease and Desist Order. OFAC may order the Subject Person to cease and desist from conduct that is prohibited by any of the sanctions programs enforced by OFAC when OFAC has reason to believe that a Subject Person has engaged in such conduct and/or that such conduct is ongoing or may recur.


III. General Factors Affecting Administrative Action

As a general matter, OFAC will consider some or all of the following General Factors in determining the appropriate administrative action in response to an apparent violation of U.S. sanctions by a Subject Person, and, where a civil monetary penalty is imposed, in determining the appropriate amount of any such penalty:


A. Willful or Reckless Violation of Law: a Subject Person’s willfulness or recklessness in violating, attempting to violate, conspiring to violate, or causing a violation of the law. Generally, to the extent the conduct at issue is the result of willful conduct or a deliberate intent to violate, attempt to violate, conspire to violate, or cause a violation of the law, the OFAC enforcement response will be stronger. Among the factors OFAC may consider in evaluating willfulness or recklessness are:


1. Willfulness. Was the conduct at issue the result of a decision to take action with the knowledge that such action would constitute a violation of U.S. law? Did the Subject Person know that the underlying conduct constituted, or likely constituted, a violation of U.S. law at the time of the conduct?


2. Recklessness. Did the Subject Person demonstrate reckless disregard for U.S. sanctions requirements or otherwise fail to exercise a minimal degree of caution or care in avoiding conduct that led to the apparent violation? Were there warning signs that should have alerted the Subject Person that an action or failure to act would lead to an apparent violation?


3. Concealment. Was there an effort by the Subject Person to hide or purposely obfuscate its conduct in order to mislead OFAC, Federal, State, or foreign regulators, or other parties involved in the conduct about an apparent violation?


4. Pattern of Conduct. Did the apparent violation constitute or result from a pattern or practice of conduct or was it relatively isolated and atypical in nature?


5. Prior Notice. Was the Subject Person on notice, or should it reasonably have been on notice, that the conduct at issue, or similar conduct, constituted a violation of U.S. law?


6. Management Involvement. In cases of entities, at what level within the organization did the willful or reckless conduct occur? Were supervisory or managerial level staff aware, or should they reasonably have been aware, of the willful or reckless conduct?


B. Awareness of Conduct at Issue: the Subject Person’s awareness of the conduct giving rise to the apparent violation. Generally, the greater a Subject Person’s actual knowledge of, or reason to know about, the conduct constituting an apparent violation, the stronger the OFAC enforcement response will be. In the case of a corporation, awareness will focus on supervisory or managerial level staff in the business unit at issue, as well as other senior officers and managers. Among the factors OFAC may consider in evaluating the Subject Person’s awareness of the conduct at issue are:


1. Actual Knowledge. Did the Subject Person have actual knowledge that the conduct giving rise to an apparent violation took place? Was the conduct part of a business process, structure or arrangement that was designed or implemented with the intent to prevent or shield the Subject Person from having such actual knowledge, or was the conduct part of a business process, structure or arrangement implemented for other legitimate reasons that made it difficult or impossible for the Subject Person to have actual knowledge?


2. Reason to Know. If the Subject Person did not have actual knowledge that the conduct took place, did the Subject Person have reason to know, or should the Subject Person reasonably have known, based on all readily available information and with the exercise of reasonable due diligence, that the conduct would or might take place?


3. Management Involvement. In the case of an entity, was the conduct undertaken with the explicit or implicit knowledge of senior management, or was the conduct undertaken by personnel outside the knowledge of senior management? If the apparent violation was undertaken without the knowledge of senior management, was there oversight intended to detect and prevent violations, or did the lack of knowledge by senior management result from disregard for its responsibility to comply with applicable sanctions laws?


C. Harm to Sanctions Program Objectives: the actual or potential harm to sanctions program objectives caused by the conduct giving rise to the apparent violation. Among the factors OFAC may consider in evaluating the harm to sanctions program objectives are:


1. Economic or Other Benefit to the Sanctioned Individual, Entity, or Country: the economic or other benefit conferred or attempted to be conferred to sanctioned individuals, entities, or countries as a result of an apparent violation, including the number, size, and impact of the transactions constituting an apparent violation(s), the length of time over which they occurred, and the nature of the economic or other benefit conferred. OFAC may also consider the causal link between the Subject Person’s conduct and the economic benefit conferred or attempted to be conferred.


2. Implications for U.S. Policy: the effect that the circumstances of the apparent violation had on the integrity of the U.S. sanctions program and the related policy objectives involved.


3. License Eligibility: whether the conduct constituting the apparent violation likely would have been licensed by OFAC under existing licensing policy.


4. Humanitarian activity: whether the conduct at issue was in support of a humanitarian activity.


D. Individual Characteristics: the particular circumstances and characteristics of a Subject Person. Among the factors OFAC may consider in evaluating individual characteristics are:


1. Commercial Sophistication: the commercial sophistication and experience of the Subject Person. Is the Subject Person an individual or an entity? If an individual, was the conduct constituting the apparent violation for personal or business reasons?


2. Size of Operations and Financial Condition: the size of a Subject Person’s business operations and overall financial condition, where such information is available and relevant. Qualification of the Subject Person as a small business or organization for the purposes of the Small Business Regulatory Enforcement Fairness Act, as determined by reference to the applicable regulations of the Small Business Administration, may also be considered.


3. Volume of Transactions: the total volume of transactions undertaken by the Subject Person on an annual basis, with attention given to the apparent violations as compared with the total volume.


4. Sanctions History: the Subject Person’s sanctions history, including OFAC’s issuance of prior penalties, findings of violations or cautionary, warning or evaluative letters, or other administrative actions (including settlements). As a general matter, OFAC will only consider a Subject Person’s sanctions history for the five years preceding the date of the transaction giving rise to the apparent violation.


E. Compliance Program: the existence, nature and adequacy of a Subject Person’s risk-based OFAC compliance program at the time of the apparent violation, where relevant. In the case of an institution subject to regulation where OFAC has entered into a Memorandum of Understanding (MOU) with the Subject Person’s regulator, OFAC will follow the procedures set forth in such MOU regarding consultation with the regulator with regard to the quality and effectiveness of the Subject Person’s compliance program. Even in the absence of an MOU, OFAC may take into consideration the views of federal, state, or foreign regulators, where relevant. Further information about risk-based compliance programs for financial institutions is set forth in the annex hereto.


F. Remedial Response: the Subject Person’s corrective action taken in response to the apparent violation. Among the factors OFAC may consider in evaluating the remedial response are:


1. The steps taken by the Subject Person upon learning of the apparent violation. Did the Subject Person immediately stop the conduct at issue?


2. In the case of an entity, the processes followed to resolve issues related to the apparent violation. Did the Subject Person discover necessary information to ascertain the causes and extent of the apparent violation, fully and expeditiously? Was senior management fully informed? If so, when?


3. In the case of an entity, whether the Subject Person adopted new and more effective internal controls and procedures to prevent a recurrence of the apparent violation. If the Subject Person did not have an OFAC compliance program in place at the time of the apparent violation, did it implement one upon discovery of the apparent violations? If it did have an OFAC compliance program, did it take appropriate steps to enhance the program to prevent the recurrence of similar violations? Did the entity provide the individual(s) responsible for the apparent violation with additional training, and/or take other appropriate action, to ensure that similar violations do not occur in the future?


4. Where applicable, whether the Subject Person undertook a thorough review to identify other possible violations.


G. Cooperation with OFAC: the nature and extent of the Subject Person’s cooperation with OFAC. Among the factors OFAC may consider in evaluating cooperation with OFAC are:


1. Did the Subject Person voluntarily self-disclose the apparent violation to OFAC?


2. Did the Subject Person provide OFAC with all relevant information regarding an apparent violation (whether or not voluntarily self-disclosed)?


3. Did the Subject Person research and disclose to OFAC relevant information regarding any other apparent violations caused by the same course of conduct?


4. Was information provided voluntarily or in response to an administrative subpoena?


5. Did the Subject Person cooperate with, and promptly respond to, all requests for information?


6. Did the Subject Person enter into a statute of limitations tolling agreement, if requested by OFAC (particularly in situations where the apparent violations were not immediately notified to or discovered by OFAC, in particularly complex cases, and in cases in which the Subject Person has requested and received additional time to respond to a request for information from OFAC)? If so, the Subject Person’s entering into a tolling agreement will be deemed a mitigating factor.



Note:

A Subject Person’s refusal to enter into a tolling agreement will not be considered by OFAC as an aggravating factor in assessing a Subject Person’s cooperation or otherwise under the Guidelines.


Where appropriate, OFAC will publicly note substantial cooperation provided by a Subject Person.


H. Timing of apparent violation in relation to imposition of sanctions: the timing of the apparent violation in relation to the adoption of the applicable prohibitions, particularly if the apparent violation took place immediately after relevant changes in the sanctions program regulations or the addition of a new name to OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List).


I. Other enforcement action: other enforcement actions taken by federal, state, or local agencies against the Subject Person for the apparent violation or similar apparent violations, including whether the settlement of alleged violations of OFAC regulations is part of a comprehensive settlement with other federal, state, or local agencies.


J. Future Compliance/Deterrence Effect: the impact administrative action may have on promoting future compliance with U.S. economic sanctions by the Subject Person and similar Subject Persons, particularly those in the same industry sector.


K. Other relevant factors on a case-by-case basis: such other factors that OFAC deems relevant on a case-by-case basis in determining the appropriate enforcement response and/or the amount of any civil monetary penalty. OFAC will consider the totality of the circumstances to ensure that its enforcement response is proportionate to the nature of the violation.


IV. Civil Penalties for Failure To Comply With a Requirement To Furnish Information or Keep Records

As a general matter, the following civil penalty amounts shall apply to a Subject Person’s failure to comply with a requirement to furnish information or maintain records:


A. The failure to comply with a requirement to furnish information pursuant to 31 CFR 501.602 may result in a penalty in an amount up to $25,542, irrespective of whether any other violation is alleged. Where OFAC has reason to believe that the apparent violation(s) that is the subject of the requirement to furnish information involves a transaction(s) valued at greater than $500,000, a failure to comply with a requirement to furnish information may result in a penalty in an amount up to$63,855, irrespective of whether any other violation is alleged. A failure to comply with a requirement to furnish information may be considered a continuing violation, and the penalties described above may be imposed each month that a party has continued to fail to comply with the requirement to furnish information. OFAC may also seek to have a requirement to furnish information judicially enforced. Imposition of a civil monetary penalty for failure to comply with a requirement to furnish information does not preclude OFAC from seeking such judicial enforcement of the requirement to furnish information.


B. The late filing of a required report, whether set forth in regulations or in a specific license, may result in a civil monetary penalty in an amount up to $3,192, if filed within the first 30 days after the report is due, and a penalty in an amount up to $6,386 if filed more than 30 days after the report is due. If the report relates to blocked assets, the penalty may include an additional $1,278 for every 30 days that the report is overdue, up to five years.


C. The failure to maintain records in conformance with the requirements of OFAC’s regulations or of a specific license may result in a penalty in an amount up to $63,973.


V. Civil Penalties

OFAC will review the facts and circumstances surrounding an apparent violation and apply the General Factors for Taking Administrative Action in Section III above in determining whether to initiate a civil penalty proceeding and in determining the amount of any civil monetary penalty. OFAC will give careful consideration to the appropriateness of issuing a cautionary letter or Finding of Violation in lieu of the imposition of a civil monetary penalty.


A. Civil Penalty Process

1. Pre-Penalty Notice. If OFAC has reason to believe that a sanctions violation has occurred and believes that a civil monetary penalty is appropriate, it will issue a Pre-Penalty Notice in accordance with the procedures set forth in the particular regulations governing the conduct giving rise to the apparent violation. The amount of the proposed penalty set forth in the Pre-Penalty Notice will reflect OFAC’s preliminary assessment of the appropriate penalty amount, based on information then in OFAC’s possession. The amount of the final penalty may change as OFAC learns additional relevant information. If, after issuance of a Pre-Penalty Notice, OFAC determines that a penalty in an amount that represents an increase of more than 10 percent from the proposed penalty set forth in the Pre-Penalty Notice is appropriate, or if OFAC intends to allege additional violations, it will issue a revised Pre-Penalty Notice setting forth the new proposed penalty amount and/or alleged violations.


a. In general, the Pre-Penalty Notice will set forth the following with respect to the specific violations alleged and the proposed penalties:


i. Description of the alleged violations, including the number of violations and their value, for which a penalty is being proposed;


ii. Identification of the regulatory or other provisions alleged to have been violated;


iii. Identification of the base category (defined below) according to which the proposed penalty amount was calculated and the General Factors that were most relevant to the determination of the proposed penalty amount;


iv. The maximum amount of the penalty to which the Subject Person could be subject under applicable law; and


v. The proposed penalty amount, determined in accordance with the provisions set forth in these Guidelines.


b. The Pre-Penalty Notice will also include information regarding how to respond to the Pre-Penalty Notice including:


i. A statement that the Subject Person may submit a written response to the Pre-Penalty Notice by a date certain addressing the alleged violation(s), the General Factors Affecting Administrative Action set forth in Section III of these Guidelines, and any other information or evidence that the Subject Person deems relevant to OFAC’s consideration.


ii. A statement that a failure to respond to the Pre-Penalty Notice may result in the imposition of a civil monetary penalty.


2. Response to Pre-Penalty Notice. A Subject Person may submit a written response to the Pre-Penalty Notice in accordance with the procedures set forth in the particular regulations governing the conduct giving rise to the apparent violation. Generally, the response should either agree to the proposed penalty set forth in the Pre-Penalty Notice or set forth reasons why a penalty should not be imposed or, if imposed, why it should be a lesser amount than proposed, with particular attention paid to the General Factors Affecting Administrative Action set forth in Section III of these Guidelines. The response should include all documentary or other evidence available to the Subject Person that supports the arguments set forth in the response. OFAC will consider all relevant materials submitted.


3. Penalty Notice. If OFAC receives no response to a Pre-Penalty Notice within the time prescribed in the Pre-Penalty Notice, or if following the receipt of a response to a Pre-Penalty Notice and a review of the information and evidence contained therein OFAC concludes that a civil monetary penalty is warranted, a Penalty Notice generally will be issued in accordance with the procedures set forth in the particular regulations governing the conduct giving rise to the violation. A Penalty Notice constitutes a final agency determination that a violation has occurred. The penalty amount set forth in the Penalty Notice will take into account relevant additional information provided in response to a Pre-Penalty Notice. In the absence of a response to a Pre-Penalty Notice, the penalty amount set forth in the Penalty Notice will generally be the same as the proposed penalty set forth in the Pre-Penalty Notice.


4. Referral to Financial Management Division. The imposition of a civil monetary penalty pursuant to a Penalty Notice creates a debt due the U.S. Government. OFAC will advise Treasury’s Financial Management Division upon the imposition of a penalty. The Financial Management Division may take follow-up action to collect the penalty assessed if it is not paid within the prescribed time period set forth in the Penalty Notice. In addition or instead, the matter may be referred to the U.S. Department of Justice for appropriate action to recover the penalty.


5. Final Agency Action. The issuance of a Penalty Notice constitutes final agency action with respect to the violation(s) for which the penalty is assessed.


B. Amount of Civil Penalty

1. Egregious case. In those cases in which a civil monetary penalty is deemed appropriate, OFAC will make a determination as to whether a case is deemed “egregious” for purposes of the base penalty calculation. This determination will be based on an analysis of the applicable General Factors. In making the egregiousness determination, OFAC generally will give substantial weight to General Factors A (“willful or reckless violation of law”), B (“awareness of conduct at issue”), C (“harm to sanctions program objectives”) and D (“individual characteristics”), with particular emphasis on General Factors A and B. A case will be considered an “egregious case” where the analysis of the applicable General Factors, with a focus on those General Factors identified above, indicates that the case represents a particularly serious violation of the law calling for a strong enforcement response. A determination that a case is “egregious” will be made by the Director or Deputy Director.


2. Pre-Penalty Notice. The penalty amount proposed in a Pre-Penalty Notice shall generally be calculated as follows, except that neither the base amount nor the proposed penalty will exceed the applicable statutory maximum amount:
6




6 For apparent violations identified in the Cuba Penalty Schedule, 68 Fed. Reg. 4429 (Jan. 29, 2003), for which a civil monetary penalty has been deemed appropriate, the base penalty amount shall equal the amount set forth in the Schedule for such violation, except that the base penalty amount shall be reduced by 50% in cases of voluntary self-disclosure.


a. Base Category Calculation

i. In a non-egregious case, if the apparent violation is disclosed through a voluntary self-disclosure by the Subject Person, the base amount of the proposed civil penalty in the Pre-Penalty Notice shall be one-half of the transaction value, capped at a maximum base amount of $165,474 per violation, except where the statutory maximum penalty applicable to the apparent violation is less than $330,947, in which case the base amount of the proposed civil penalty in the Pre-Penalty Notice shall be capped at one-half the statutory maximum penalty applicable to the apparent violation.


ii. In a non-egregious case, if the apparent violation comes to OFAC’s attention by means other than a voluntary self-disclosure, the base amount of the proposed civil penalty in the Pre-Penalty Notice shall be the “applicable schedule amount,” as defined above. For apparent violations where the statutory maximum penalty applicable to the apparent violation is $330,947 or greater, the maximum base amount shall be capped at $330,947. For apparent violations where the statutory maximum penalty applicable to the apparent violation is less than $330,947, the maximum base amount shall be capped at the statutory maximum penalty amount applicable to the apparent violation.


iii. In an egregious case, if the apparent violation is disclosed through a voluntary self-disclosure by a Subject Person, the base amount of the proposed civil penalty in the Pre-Penalty Notice shall be one-half of the applicable statutory maximum penalty applicable to the violation.


iv. In an egregious case, if the apparent violation comes to OFAC’s attention by means other than a voluntary self-disclosure, the base amount of the proposed civil penalty in the Pre-Penalty Notice shall be the applicable statutory maximum penalty amount applicable to the violation.


v. The applicable statutory maximum civil penalty per violation for each statute enforced by OFAC is as follows: International Emergency Economic Powers Act (IEEPA) – greater of $330,947 or twice the amount of the underlying transaction; Trading with the Enemy Act (TWEA) – $97,529; Foreign Narcotics Kingpin Designation Act (FNKDA) – $1,644,396; Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) – greater of $87,3614 or twice the amount of which a financial institution was required to retain possession or control; and Clean Diamond Trade Act (CDTA) – $14,950. The civil penalty amounts authorized under these statutes are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).


vi. The following matrix represents the base amount of the proposed civil penalty for each category of violation:



b. Adjustment for Applicable Relevant General Factors

The base amount of the proposed civil penalty may be adjusted to reflect applicable General Factors for Administrative Action set forth in Section III of these Guidelines. Each factor may be considered mitigating or aggravating, resulting in a lower or higher proposed penalty amount. As a general matter, in those cases where the following General Factors are present, OFAC will adjust the base proposed penalty amount in the following manner:


i. In cases involving substantial cooperation with OFAC but no voluntary self-disclosure as defined herein, including cases in which an apparent violation is reported to OFAC by a third party but the Subject Person provides substantial additional information regarding the apparent violation and/or other related violations, the base penalty amount generally will be reduced between 25 and 40 percent. Substantial cooperation in cases involving voluntary self-disclosure may also be considered as a further mitigating factor.


ii. In cases involving a Subject Person’s first violation, the base penalty amount generally will be reduced up to 25 percent. An apparent violation generally will be considered a “first violation” if the Subject Person has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the transaction giving rise to the apparent violation. A group of substantially similar apparent violations addressed in a single Pre-Penalty Notice shall be considered as a single violation for purposes of this subsection. In those cases where a prior penalty notice or Finding of Violation within the preceding five years involved conduct of a substantially different nature from the apparent violation at issue, OFAC may consider the apparent violation at issue a “first violation.” In determining the extent of any mitigation for a first violation, OFAC may consider any prior OFAC enforcement action taken with respect to the Subject Person, including any cautionary, warning or evaluative letters issued, or any civil monetary settlements entered into with OFAC.


In all cases, the proposed penalty amount will not exceed the applicable statutory maximum.


In cases involving a large number of apparent violations, where the transaction value of all apparent violations is either unknown or would require a disproportionate allocation of resources to determine, OFAC may estimate or extrapolate the transaction value of the total universe of apparent violations in determining the amount of any proposed civil monetary penalty.


3. Penalty Notice. The amount of the proposed civil penalty in the Pre-Penalty Notice will be the presumptive starting point for calculation of the civil penalty amount in the Penalty Notice. OFAC may adjust the penalty amount in the Penalty Notice based on:


a. Evidence presented by the Subject Person in response to the Pre-Penalty Notice, or otherwise received by OFAC with respect to the underlying violation(s); and/or


b. Any modification resulting from further review and reconsideration by OFAC of the proposed civil monetary penalty in light of the General Factors for Administrative Action set forth in Section III above.


In no event will the amount of the civil monetary penalty in the Penalty Notice exceed the proposed penalty set forth in the Pre-Penalty Notice by more than 10 percent, or include additional alleged violations, unless a revised Pre-Penalty Notice has first been sent to the Subject Person as set forth above. In the event that OFAC determines upon further review that no penalty is appropriate, it will so inform the Subject Person in a no-action letter, a cautionary letter, or a Finding of Violation.


C. Settlements

A settlement does not constitute a final agency determination that a violation has occurred.


1. Settlement Process. Settlement discussions may be initiated by OFAC, the Subject Person or the Subject Person’s authorized representative. Settlements generally will be negotiated in accordance with the principles set forth in these Guidelines with respect to appropriate penalty amounts. OFAC may condition the entry into or continuation of settlement negotiations on the execution of a tolling agreement with respect to the statute of limitations.


2. Settlement Prior to Issuance of Pre-Penalty Notice. Where settlement discussions occur prior to the issuance of a Pre-Penalty Notice, the Subject Person may request in writing that OFAC withhold issuance of a Pre-Penalty Notice pending the conclusion of settlement discussions. OFAC will generally agree to such a request as long as settlement discussions are continuing in good faith and the statute of limitations is not at risk of expiring.


3. Settlement Following Issuance of Pre-Penalty Notice. If a matter is settled after a Pre-Penalty Notice has been issued, but before a final Penalty Notice is issued, OFAC will not make a final determination as to whether a sanctions violation has occurred. In the event no settlement is reached, the period specified for written response to the Pre-Penalty Notice remains in effect unless additional time is granted by OFAC.


4. Settlements of Multiple Apparent Violations. A settlement initiated for one apparent violation may also involve a comprehensive or global settlement of multiple apparent violations covered by other Pre-Penalty Notices, apparent violations for which a Pre-Penalty Notice has not yet been issued by OFAC, or previously unknown apparent violations reported to OFAC during the pendency of an investigation of an apparent violation.


Annex

The following matrix can be used by financial institutions to evaluate their compliance programs:


OFAC Risk Matrix

Low
Moderate
High
Stable, well-known customer base in a localized environmentCustomer base changing due to branching, merger, or acquisition in the domestic marketA large, fluctuating client base in an international environment.
Few high-risk customers; these may include nonresident aliens, foreign customers (including accounts with U.S. powers of attorney), and foreign commercial customersA moderate number of high-risk customersA large number of high-risk customers.
No overseas branches and no correspondent accounts with foreign banksOverseas branches or correspondent accounts with foreign banksOverseas branches or multiple correspondent accounts with foreign banks.
No electronic services (e.g., e-banking) offered, or products available are purely informational or non-transactionalThe institution offers limited electronic (e.g., e-banking) products and servicesThe institution offers a wide array of electronic (e.g., e-banking) products and services (i.e., account transfers, e-bill payment, or accounts opened via the Internet).
Limited number of funds transfers for customers and non-customers, limited third-party transactions, and no international funds transfersA moderate number of funds transfers, mostly for customers. Possibly, a few international funds transfers from personal or business accountsA high number of customer and non-customer funds transfers, including international funds transfers.
No other types of international transactions, such as trade finance, cross-border ACH, and management of sovereign debtLimited other types of international transactionsA high number of other types of international transactions.
No history of OFAC actions. No evidence of apparent violation or circumstances that might lead to a violationA small number of recent actions (i.e., actions within the last five years) by OFAC, including notice letters, or civil money penalties, with evidence that the institution addressed the issues and is not at risk of similar violations in the futureMultiple recent actions by OFAC, where the institution has not addressed the issues, thus leading to an increased risk of the institution undertaking similar violations in the future.
Management has fully assessed the institution’s level of risk based on its customer base and product lines. This understanding of risk and strong commitment to OFAC compliance is satisfactorily communicated throughout the organizationManagement exhibits a reasonable understanding of the key aspects of OFAC compliance and its commitment is generally clear and satisfactorily communicated throughout the organization, but it may lack a program appropriately tailored to riskManagement does not understand, or has chosen to ignore, key aspects of OFAC compliance risk. The importance of compliance is not emphasized or communicated throughout the organization.
The board of directors, or board committee, has approved an OFAC compliance program that includes policies, procedures, controls, and information systems that are adequate, and consistent with the institution’s OFAC risk profileThe board has approved an OFAC compliance program that includes most of the appropriate policies, procedures, controls, and information systems necessary to ensure compliance, but some weaknesses are notedThe board has not approved an OFAC compliance program, or policies, procedures, controls, and information systems are significantly deficient.
Staffing levels appear adequate to properly execute the OFAC compliance programStaffing levels appear generally adequate, but some deficiencies are notedManagement has failed to provide appropriate staffing levels to handle workload.
Authority and accountability for OFAC compliance are clearly defined and enforced, including the designation of a qualified OFAC officerAuthority and accountability are defined, but some refinements are needed. A qualified OFAC officer has been designatedAuthority and accountability for compliance have not been clearly established. No OFAC compliance officer, or an unqualified one, has been appointed. The role of the OFAC officer is unclear.
Training is appropriate and effective based on the institution’s risk profile, covers applicable personnel, and provides necessary up-to-date information and resources to ensure complianceTraining is conducted and management provides adequate resources given the risk profile of the organization; however, some areas are not covered within the training programTraining is sporadic and does not cover important regulatory and risk areas or is nonexistent.
The institution employs strong quality control methodsThe institution employs limited quality control methodsThe institution does not employ quality control methods.

[74 FR 57601, Nov. 9, 2009, as amended at 81 FR 43073, July 1, 2016; 82 FR 10435, Feb. 10, 2017; 83 FR 11877, Mar. 19, 2018; 84 FR 27715, June 14, 2019; 85 FR 19885, Apr. 9, 2020; 85 FR 48475, Aug. 11, 2020; 85 FR 54914, Sept. 3, 2020; 86 FR 14536, Mar. 17, 2021; 86 FR 18896, Apr. 12, 2021; 87 FR 3206, Jan. 21, 2022; 87 FR 7370, Feb. 9, 2022]


PART 510 – NORTH KOREA SANCTIONS REGULATIONS


Authority:3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; 22 U.S.C. 287c, 9201-9255; Pub. L. 101-410, 104 Stat. 890, as amended (28 U.S.C. 2461 note); Pub. L. 115-44, 131 Stat. 886 (codified in scattered sections of 22 U.S.C.); E.O. 13466, 73 FR 36787, 3 CFR, 2008 Comp., p. 195; E.O. 13551, 75 FR 53837, 3 CFR., 2010 Comp., p. 242; E.O. 13570, 76 FR 22291, 3 CFR, 2011 Comp., p. 233; E.O. 13687, 80 FR 819, 3 CFR, 2015 Comp., p. 259; E.O. 13722, 81 FR 14943, 3 CFR, 2016 Comp., p. 446; E.O. 13810, 82 FR 44705, 3 CFR, 2017 Comp., p. 379.



Source:83 FR 9187, Mar. 5, 2018, unless otherwise noted.

Subpart A – Relation of This Part to Other Laws and Regulations

§ 510.101 Relation of this part to other laws and regulations.

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 taken pursuant to part 501 of this chapter with respect to the prohibitions contained in this part are considered actions taken pursuant to this part. Differing foreign policy and national security circumstances 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. 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

§ 510.201 Prohibited transactions involving blocked property.

(a)(1) All property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person of the Government of North Korea or the Workers’ Party of Korea are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.


(2) All property and interests in property of North Korea or a North Korean national that were blocked pursuant to the Trading With the Enemy Act as of June 16, 2000 and remained blocked on June 26, 2008, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.


(3) All property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:


(i) E.O. 13551 Annex. The persons listed in the Annex to Executive Order 13551 of August 30, 2010;


(ii) E.O. 13551. Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:


(A) To have, directly or indirectly, imported, exported, or reexported to, into, or from North Korea any arms or related materiel;


(B) To have, directly or indirectly, provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea;


(C) To have, directly or indirectly, imported, exported, or reexported luxury goods to or into North Korea;


(D) To have, directly or indirectly, engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof;


(E) To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the activities described in paragraphs (a)(3)(ii)(A) through (D) of this section or any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(i) or (ii) of this section;


(F) To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(i) or (ii) of this section; or


(G) To have attempted to engage in any of the activities described in paragraphs (a)(3)(ii)(A) through (F) of this section;


(iii) E.O. 13687. Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:


(A) To be an agency, instrumentality, or controlled entity of the Government of North Korea or the Workers’ Party of Korea;


(B) To be an official of the Government of North Korea;


(C) To be an official of the Workers’ Party of Korea;


(D) To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the Government of North Korea or any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(iii) of this section; or


(E) To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the Government of North Korea or any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(iii) of this section;


(iv) E.O. 13722. Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:


(A) To operate in any industry in the North Korean economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be subject to paragraph (a)(3)(iv) of this section, such as transportation, mining, energy, or financial services;



Note 1 to paragraph (a)(3)(iv)(A):

Any industry in the North Korean economy that is determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be subject to paragraph (a)(3)(iv) of this section will be so identified in a publication in the Federal Register.


(B) To have sold, supplied, transferred, or purchased, directly or indirectly, to or from North Korea or any person acting for or on behalf of the Government of North Korea or the Workers’ Party of Korea, metal, graphite, coal, or software, where any revenue or goods received may benefit the Government of North Korea or the Workers’ Party of Korea, including North Korea’s nuclear or ballistic missile programs;


(C) To have engaged in, facilitated, or been responsible for an abuse or violation of human rights by the Government of North Korea or the Workers’ Party of Korea or any person acting for or on behalf of either such entity;


(D) To have engaged in, facilitated, or been responsible for the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea or the Workers’ Party of Korea;


(E) To have engaged in significant activities undermining cybersecurity through the use of computer networks or systems against targets outside of North Korea on behalf of the Government of North Korea or the Workers’ Party of Korea;


(F) To have engaged in, facilitated, or been responsible for censorship by the Government of North Korea or the Workers’ Party of Korea;


(G) To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to paragraph (a)(1) or (a)(3)(iv) of this section;


(H) To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraph (a)(1) or (a)(3)(iv) of this section; or


(I) To have attempted to engage in any of the activities described in paragraphs (a)(3)(iv)(A) through (H) of this section;


(v) E.O. 13810 section 1. Any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:


(A) To operate in the construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries in North Korea;


(B) To own, control, or operate any port in North Korea, including any seaport, airport, or land port of entry;


(C) To have engaged in at least one significant importation from or exportation to North Korea of any goods, services, or technology;


(D) To be a North Korean person, including a North Korean person that has engaged in commercial activity that generates revenue for the Government of North Korea or the Workers’ Party of Korea;


(E) To have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(v) of this section; or


(F) To be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraph (a)(3)(v) of this section;


(vi) E.O. 13810 section 4. Any person that is a foreign financial institution:


(A) Determined by the Secretary of the Treasury, in consultation with the Secretary of State, to have, on or after September 21, 2017, knowingly conducted or facilitated any significant transaction:


(1) On behalf of any person whose property and interests in property are blocked pursuant to Executive Order 13551, Executive Order 13687, Executive Order 13722, or Executive Order 13810, or of any person whose property and interests in property are blocked pursuant to Executive Order 13382 in connection with North Korea-related activities; or


(2) In connection with trade with North Korea; and


(B) With respect to which the Secretary of the Treasury, in consultation with the Secretary of State, has exercised the authority to block all property and interests in property;



Note 2 to paragraph (a)(3)(vi):

See § 510.210 for alternative sanctions that can be imposed on a foreign financial institution when the determination specified in paragraph (a)(3)(vi)(A) of this section is made.


(vii) Section 104(a) of the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America’s Adversaries Through Sanctions Act and the National Defense Authorization Act for Fiscal Year 2020 (NKSPEA, as amended). Any person the Secretary of the Treasury determines, in consultation with the Secretary of State, knowingly:


(A) Directly or indirectly, imports, exports, or reexports to, into, or from North Korea any goods, services, or technology controlled for export by the United States because of the use of such goods, services, or technology for weapons of mass destruction or delivery systems for such weapons and materially contributes to the use, development, production, possession, or acquisition by any person of a nuclear, radiological, chemical, or biological weapon or any device or system designed in whole or in part to deliver such a weapon;


(B) Directly or indirectly, provides training, advice, or other services or assistance, or engages in significant financial transactions, relating to the manufacture, maintenance, or use of any such weapon, device, or system to be imported, exported, or reexported to, into, or from North Korea;


(C) Directly or indirectly, imports, exports, or reexports luxury goods to or into North Korea;


(D) Engages in, is responsible for, or facilitates censorship by the Government of North Korea;


(E) Engages in, is responsible for, or facilitates serious human rights abuses by the Government of North Korea;


(F) Directly or indirectly, engages in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, or narcotics trafficking that supports the Government of North Korea or any senior official or person acting for or on behalf of that Government;


(G) Engages in significant activities undermining cybersecurity through the use of computer networks or systems against foreign persons, governments, or other entities on behalf of the Government of North Korea;


(H) Directly or indirectly, sells, supplies, or transfers to or from the Government of North Korea or any person acting for or on behalf of that Government, a significant amount of precious metal, graphite, raw or semi-finished metals or aluminum, steel, coal, or software, for use by or in industrial processes directly related to weapons of mass destruction and delivery systems for such weapons, other proliferation activities, the Korean Workers’ Party, armed forces, internal security or intelligence activities, or the operation and maintenance of political prison camps or forced labor camps, including outside of North Korea;


(I) Directly or indirectly, imports, exports, or reexports to, into, or from North Korea any arms or related materiel or any defense article or defense service (as such terms are defined in section 47 of the Arms Export Control Act (22 U.S.C. 2794));


(J) Directly or indirectly, purchases or otherwise acquires from North Korea any significant amounts of gold, titanium ore, vanadium ore, copper, silver, nickel, zinc, or rare earth minerals;


(K) Directly or indirectly, sells or transfers to North Korea any significant amounts of rocket, aviation, or jet fuel (except for use by a civilian passenger aircraft outside North Korea, exclusively for consumption during its flight to North Korea or its return flight);


(L) Directly or indirectly, provides significant amounts of fuel or supplies, provides bunkering services, or facilitates a significant transaction or transactions to operate or maintain, a vessel or aircraft that is designated under an applicable Executive order or an applicable United Nations Security Council resolution (as such terms are defined in NKSPEA, as amended), or that is owned or controlled by a person designated under an applicable Executive order or applicable United Nations Security Council resolution (as such terms are defined in NKSPEA, as amended);


(M) Directly or indirectly, insures, registers, facilitates the registration of, or maintains insurance or a registration for, a vessel owned or controlled by the Government of North Korea, except as specifically approved by the United Nations Security Council;


(N) Directly or indirectly, maintains a correspondent account as defined in section 201A(d)(1) of NKSPEA, as amended, with any North Korean financial institution, except as specifically approved by the United Nations Security Council; or


(O) Attempts to engage in any of the conduct described in paragraphs (a)(3)(vii)(A) through (N) of this section;


(viii) Section 104(b) of NKSPEA, as amended. Any person the Secretary of the Treasury determines, in consultation with the Secretary of State, knowingly:


(A) Engages in, contributes to, assists, sponsors, or provides financial, material, or technological support for, or goods and services in support of, any person designated pursuant to: An applicable United Nations Security Council resolution (as defined in NKSPEA, as amended); this section; or any applicable Executive order (as defined in NKSPEA, as amended);


(B) Contributed to:


(1) The bribery of an official of the Government of North Korea or any person acting for on behalf of that official;


(2) The misappropriation, theft, or embezzlement of public funds by, or for the benefit of, an official of the Government of North Korea or any person acting for or on behalf of that official; or


(3) The use of any proceeds of any activity described in paragraph (a)(3)(viii)(B)(1) or (2) of this section;


(C) Materially assisted, sponsored, or provided significant financial, material, or technological support for, or goods or services to or in support of, the activities described in paragraph (a)(3)(viii)(A) or (B) of this section;


(D) Directly or indirectly, purchased or otherwise acquired from the Government of North Korea significant quantities of coal, iron, or iron ore, in excess of the limitations provided in applicable United Nations Security Council resolutions (as defined in NKSPEA, as amended);


(E) Directly or indirectly, purchased or otherwise acquired significant types or amounts of textiles from the Government of North Korea;


(F) Facilitated a significant transfer of funds or property of the Government of North Korea that materially contributes to any violation of an applicable United Nations Security Council resolution (as defined in NKSPEA, as amended);


(G) Directly or indirectly, facilitated a significant transfer to or from the Government of North Korea of bulk cash, precious metals, gemstones, or other stores of value not described under paragraph (a)(3)(vii)(J) of this section;


(H) Directly or indirectly, sold, transferred, or otherwise provided significant amounts of crude oil, condensates, refined petroleum, other types of petroleum or petroleum byproducts, liquefied natural gas, or other natural gas resources to the Government of North Korea (except for heavy fuel oil, gasoline, or diesel fuel for humanitarian use or as excepted under paragraph (a)(3)(vii)(K) of this section);


(I) Directly or indirectly, engaged in, facilitated, or was responsible for the online commercial activities of the Government of North Korea, including online gambling;


(J) Directly or indirectly, purchased or otherwise acquired fishing rights from the Government of North Korea;


(K) Knowingly, directly or indirectly, purchased or otherwise acquired significant types or amounts of food or agricultural products from the Government of North Korea;


(L) Directly or indirectly, engaged in, facilitated, or was responsible for the exportation of workers from North Korea in a manner intended to generate significant revenue, directly or indirectly, for use by the Government of North Korea or by the Workers’ Party of Korea;


(M) Conducted a significant transaction or transactions in North Korea’s transportation, mining, energy, or financial services industries; or


(N) Facilitated the operation of any branch, subsidiary, or office of a North Korean financial institution, except as specifically approved by the United Nations Security Council, and other than through a correspondent account as described in paragraph (a)(3)(vii)(N) of this section;


(ix) Section 104(g) of NKSPEA, as amended. Any person the Secretary of the Treasury determines, in consultation with the Secretary of State, knowingly:


(A) Directly or indirectly, engages in the importation from or exportation to North Korea of significant quantities of:


(1) Coal, textiles, seafood, iron, or iron ore;


(2) Refined petroleum products or crude oil above limits set by the United Nations Security Council and with which the United States concurs; or


(3) Services or technology related to goods specified in paragraph (a)(3)(ix)(A)(1) and (2) of this section;


(B) Facilitates a significant transfer of funds or property of the Government of North Korea that materially contributes to any violation of an applicable United Nations Security Council resolution (as defined in NKSPEA, as amended);


(C) Directly or indirectly, engages in, facilitates, or is responsible for the exportation of workers from North Korea, or the employment of such workers, in a manner that generates significant revenue, directly or indirectly, for use by the Government of North Korea or by the Workers’ Party of Korea;


(D) Directly or indirectly, sells or transfers a significant number of vessels to North Korea, except as specifically approved by the United Nations Security Council;


(E) Engages in a significant activity to charter, insure, register, facilitate the registration of, or maintain insurance or a registration for, a vessel owned, controlled, commanded, or crewed by a North Korean person; or


(F) Contributes to and participates in:


(1) A significant act of bribery of an official of the Government of North Korea or any person acting for or on behalf of that official;


(2) The misappropriation, theft, or embezzlement of a significant amount of public funds by, or for the benefit of, an official of the Government of North Korea or any person acting for or on behalf of that official; or


(3) The use of any proceeds of any activity described in paragraph (a)(3)(ix)(A) or (B) of this section; or


(x) Section 201B of NKSPEA, as amended. Any foreign financial institution that the Secretary of the Treasury determines, in consultation with the Secretary of State, knowingly, on or after April 18, 2020, provides significant financial services to any person designated for the imposition of sanctions with respect to North Korea described in paragraphs (a)(3)(vii) through (ix) of this section and under an applicable Executive order (as defined in NKSPEA, as amended) or an applicable United Nations Security Council resolution (as defined in NKSPEA, as amended), and with respect to which the Secretary of the Treasury has exercised the authority to block all property and interests in property.



Note 3 to paragraph (a)(3)(x):

See § 510.210(c) for alternative sanctions that can be imposed on a foreign financial institution when the determination specified in paragraph (a)(3)(x) of this section is made.



Note 4 to paragraph (a):

The names of persons listed in or designated or identified pursuant to E.O. 13551, E.O. 13687, E.O. 13722, or E.O. 13810 and whose property and interests in property are blocked pursuant to those orders and who are referenced in paragraph (a) of this section are published in the Federal Register and incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) with the following identifiers: for E.O. 13551: “[DPRK];” for E.O. 13687: “[DPRK2];” for E.O. 13722: “[DPRK3];” and for E.O. 13810: “[DPRK4].” The names of persons designated or identified pursuant to NKSPEA, as amended, will be incorporated into the SDN List with the identifier “[DPRK-NKSPEA].” Certain transactions with persons blocked pursuant to paragraph (a) of this section, or blocked pursuant to other parts of 31 CFR chapter V in connection with North Korea-related activities, may result in the imposition of secondary sanctions, and therefore such blocked persons’ entries on the SDN List will also include the descriptive prefix text “Secondary sanctions risk:”, followed by information about the applicable secondary sanctions authority. Pursuant to § 510.214, persons owned or controlled by a U.S. financial institution are subject to certain prohibitions under this part; as a result, the entries of persons blocked pursuant to paragraph (a) of this section, or blocked pursuant to other parts of 31 CFR chapter V in connection with North Korea-related activities, will also include the descriptive prefix text “Transactions Prohibited For Persons Owned or Controlled By U.S. Financial Institutions:”, followed by information about the applicable sanctions authority. The SDN List is accessible through the following page on OFAC’s website: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in appendix A to this chapter. See § 510.411 concerning entities that may not be listed on the SDN List but whose property and interests in property are nevertheless blocked pursuant to paragraph (a) of this section. The property and interests in property of persons who meet the definition of the term Government of North Korea, as defined in § 510.311, are blocked pursuant to paragraph (a) of this section regardless of whether the names of such persons are published in the Federal Register or incorporated into the SDN List.



Note 5 to paragraph (a):

The International Emergency Economic Powers Act (50 U.S.C. 1701-1706), in Section 203 (50 U.S.C. 1702), authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to paragraph (a) of this section also are published in the Federal Register and incorporated into the SDN List with the identifier “BPI-DPRK.”



Note 6 to paragraph (a):

Sections 501.806 and 501.807 of this chapter describe the procedures to be followed by persons seeking, respectively, the unblocking of funds that they believe were blocked due to mistaken identity, and administrative reconsideration of their status as persons whose property and interests in property are blocked pursuant to paragraph (a) of this section.


(b) The prohibitions in paragraph (a) of this section include prohibitions on the following transactions:


(1) The making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to paragraph (a) of this section; and


(2) The receipt of any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked pursuant to paragraph (a) of this section.


(c) Unless authorized by this part or by a specific license expressly referring to this part, any dealing in securities (or evidence thereof) held within the possession or control of a U.S. person and either registered or inscribed in the name of, or known to be held for the benefit of, or issued by, the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to paragraph (a) of this section is prohibited. This prohibition includes 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, any securities on or after the effective date. This prohibition applies irrespective of the fact that at any time (whether prior to, on, or subsequent to the effective date) the registered or inscribed owner of any such securities may have or might appear to have assigned, transferred, or otherwise disposed of the securities.


(d) All funds that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person and that originate from, are destined for, or pass through a foreign bank account that has been determined by the Secretary of the Treasury to be owned or controlled by a North Korean person, or to have been used to transfer funds in which any North Korean person has an interest, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.


(e) Funds subject to blocking or blocking pending investigation pursuant to paragraph (d) of this section may be identified via actual or constructive notice from OFAC to relevant U.S. persons believed to be holding or to soon come into possession of such funds. To the extent a foreign bank account determined to meet the criteria contained in paragraph (d) of this section is publicized, it will be published in the Federal Register.


(f)(1) The prohibitions in paragraph (a)(1) of this section apply except to the extent provided in regulations, orders, directives, or licenses that may be issued pursuant to this part or pursuant to the export control authorities implemented by the U.S. Department of Commerce, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


(2) The prohibitions in paragraphs (a)(2), (a)(3)(i) through (iii), and (d) of this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


(3) The prohibitions in paragraphs (a)(3)(iv) through (v) of this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date. These prohibitions are in addition to the export control authorities administered by the Department of Commerce.


[83 FR 9187, Mar. 5, 2018, as amended at 84 FR 30869, June 28, 2019; 85 FR 20159, Apr. 10, 2020]


§ 510.202 Effect of transfers violating the provisions of this part.

(a) Any transfer after the effective date that is in violation of any provision of this part or of any regulation, order, directive, ruling, instruction, or license issued pursuant to this part, and that involves any property or interests in property blocked pursuant to § 510.201 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 interests in property.


(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 any interest in, any property or interests in property blocked pursuant to § 510.201 unless the person who holds or maintains such property, prior to that date, had written notice of the transfer or by any written evidence had recognized such transfer.


(c) Unless otherwise provided, a license or other authorization issued by OFAC before, during, or after a transfer shall validate such transfer or make it enforceable to the same extent that it would be valid or enforceable but for the provisions of this part and any regulation, order, directive, ruling, instruction, or license issued pursuant to this part.


(d) Transfers of property that 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 is or was held or maintained (and as to such person only) in cases in which such person is able to establish to the satisfaction of OFAC 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 is or was held or maintained (and as to such person only);


(2) The person with whom such property is or 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 issued 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 withholding of material facts or was otherwise fraudulently obtained; and


(3) The person with whom such property is or was held or maintained filed with OFAC 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 directive or authorization issued pursuant to this part;


(ii) Such transfer was not licensed or authorized by OFAC; or


(iii) If a license did purport to cover the transfer, such license had been obtained by misrepresentation of a third party or withholding of material facts or was otherwise fraudulently obtained.



Note 1 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 pursuant to this part, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property and interests in property blocked pursuant to § 510.201.


§ 510.203 Holding of funds in interest-bearing accounts; investment and reinvestment.

(a) Except as provided in paragraph (e) or (f) of this section, or as otherwise directed or authorized by OFAC, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to § 510.201, 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 that are commercially reasonable; or


(ii) With a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), provided the funds are invested in a money market fund or in U.S. Treasury bills.


(2) Funds held or placed in a blocked account pursuant to paragraph (a) of this section may not be invested in instruments the maturity of which exceeds 180 days.


(c) 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.


(d) For purposes of this section, if interest is credited to a separate blocked account or subaccount, the name of the account party on each account must be the same.


(e) Blocked funds held in instruments the maturity of which exceeds 180 days at the time the funds become subject to § 510.201 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 (a) or (f) of this section.


(f) Blocked funds held in accounts or instruments outside the United States at the time the funds become subject to § 510.201 may continue to be held in the same type of accounts or instruments, provided the funds earn interest at rates that are commercially reasonable.


(g) 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. However, OFAC may issue licenses permitting or directing such sales or liquidation in appropriate cases.


(h) Funds subject to this section may not be held, invested, or reinvested in a manner that provides financial or economic benefit or access to the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a), nor may their holder cooperate in or facilitate the pledging or other attempted use as collateral of blocked funds or other assets.


§ 510.204 Expenses of maintaining blocked physical property; liquidation of blocked property.

(a) Except as otherwise authorized, and notwithstanding the existence of any rights or obligations conferred or imposed by any international agreement or contract entered into or any license or permit granted prior to the effective date, all expenses incident to the maintenance of physical property blocked pursuant to § 510.201 shall be the responsibility of the owners or operators of such property, which expenses shall not be met from blocked funds.


(b) Property blocked pursuant to § 510.201 may, in the discretion of OFAC, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.


§ 510.205 Prohibited importation of goods, services, or technology from North Korea.

(a) The importation into the United States, directly or indirectly, of any goods, services, or technology from North Korea is prohibited.


(b) The prohibitions in this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.206 Prohibited exportation or reexportation of goods, services, or technology to North Korea.

(a) The exportation or reexportation, directly or indirectly, from the United States, or by a U.S. person, wherever located, of any goods, services, or technology to North Korea is prohibited.


(b) The prohibitions in this section apply except to the extent provided in regulations, orders, directives, or licenses that may be issued pursuant to this part or pursuant to the export control authorities implemented by the U.S. Department of Commerce, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.207 Prohibited vessel transactions related to North Korean registration and flagging.

(a) U.S. persons may not register a vessel in North Korea, obtain authorization for a vessel to fly the North Korean flag, or own, lease, operate, or insure any vessel flagged by North Korea.


(b) The prohibitions in this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.208 Prohibited aircraft landing or vessel calling in the United States.

(a) No aircraft in which a foreign person has an interest that has landed at a place in North Korea may land at a place in the United States within 180 days after departure from North Korea.


(b) No vessel in which a foreign person has an interest that has called at a port in North Korea within the previous 180 days, and no vessel in which a foreign person has an interest that has engaged in a ship-to-ship transfer with such a vessel within the previous 180 days, may call at a port in the United States.


(c) The prohibitions in this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.209 Prohibited new investment in North Korea.

(a) New investment, as defined in § 510.318, in North Korea by a U.S. person, wherever located, is prohibited.


(b) The prohibitions in this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part or pursuant to the export control authorities implemented by the U.S. Department of Commerce, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.210 Prohibitions or strict conditions with respect to correspondent or payable-through accounts or blocking of certain foreign financial institutions identified by the Secretary of the Treasury.

(a) Prohibited activities. A U.S. financial institution shall not:


(1) Open or maintain a correspondent account or a payable-through account in the United States for a foreign financial institution for which the opening or maintaining of such an account is prohibited pursuant to this section; or


(2) Maintain a correspondent account or a payable-through account in the United States in a manner that is inconsistent with any strict condition imposed and in effect pursuant to this section.


(b) Sanctionable activity by foreign financial institutions prohibited by Executive Order 13810. The Secretary of the Treasury, in consultation with the Secretary of State, may determine that a foreign financial institution has, on or after September 21, 2017, knowingly conducted or facilitated any significant transaction:


(1) On behalf of any person whose property and interests in property are blocked pursuant to Executive Order 13551, Executive Order 13687, Executive Order 13722, or Executive Order 13810, or on behalf of any person whose property and interests in property are blocked pursuant to Executive Order 13382 in connection with North Korea-related activities; or


(2) In connection with trade with North Korea.


(c) Sanctionable activity by foreign financial institutions prohibited by NKSPEA, as amended. The Secretary of the Treasury, in consultation with the Secretary of State, may determine that a foreign financial institution has, on or after April 18, 2020, knowingly provided significant financial services to any person designated for the imposition of sanctions with respect to North Korea described in § 510.201(a)(3)(vii) through (ix) and under an applicable Executive order (as defined in NKSPEA, as amended) or an applicable United Nations Security Council resolution (as defined in NKSPEA, as amended).


(d) Imposition of sanctions on foreign financial institutions. Upon determining that a foreign financial institution has engaged in sanctionable activity described in paragraph (b) or (c) of this section, the Secretary of the Treasury, in consultation with the Secretary of State, may:


(1) Prohibit the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for the foreign financial institution; or


(2) Impose one or more strict conditions on the maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for the foreign financial institution. Such conditions may include the following:


(i) Prohibiting or restricting any provision of trade finance through the correspondent account or payable-through account of the foreign financial institution;


(ii) Restricting the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution to certain types of transactions, such as personal remittances;


(iii) Placing monetary limits on, or limiting the volume of, the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution;


(iv) Requiring pre-approval from the U.S. financial institution for all transactions processed through the correspondent account or payable-through account of the foreign financial institution; or


(v) Prohibiting or restricting the processing of foreign exchange transactions through the correspondent account or payable-through account of the foreign financial institution.


(e) Applicability of prohibitions. The prohibitions in this section apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.



Note 1 to § 510.210:

For information regarding persons blocked pursuant to this part, or another part of 31 CFR chapter V in connection with North Korea-related activities, including identifier information for entries on the SDN List, see Note 4 to § 510.201(a).



Note 2 to § 510.210:

The names of foreign financial institutions for which the opening or maintaining of a correspondent account or a payable-through account in the United States is prohibited or for which the maintenance of a correspondent account or payable-through account is subject to one or more strict conditions pursuant to this section will be added to the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List) on OFAC’s website (www.treasury.gov/ofac), and published in the Federal Register along with the applicable prohibition or strict condition(s).


[83 FR 9187, Mar. 5, 2018, as amended at 84 FR 30870, June 28, 2019; 85 FR 20161, Apr. 10, 2020]


§ 510.211 Prohibited facilitation.

(a) Except as otherwise authorized, U.S. persons, wherever located, are prohibited from approving, financing, facilitating, or guaranteeing a transaction by a foreign person where the transaction by that foreign person would be prohibited by § 510.201(d), § 510.206, or § 510.209 if performed by a U.S. person or within the United States.


(b)(1) The prohibitions in this section with respect to § 510.201(d) apply except to the extent provided by regulations, orders, directives, or licenses that may be issued pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


(2) The prohibitions in this section with respect to §§ 510.206 and 510.209 apply except to the extent provided in regulations, orders, directives, or licenses that may be issued pursuant to this part or pursuant to the export control authorities implemented by the U.S. Department of Commerce, and notwithstanding any contract entered into or any license or permit granted prior to the effective date.


§ 510.212 Evasions; attempts; causing violations; conspiracies.

(a) Any transaction on or after the effective date that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this part is prohibited.


(b) Any conspiracy formed to violate the prohibitions set forth in this part is prohibited.


§ 510.213 Exempt transactions.

(a) United Nations Participation Act. The exemptions described in this section do not apply to transactions involving property or interests in property of persons whose property and interests in property are blocked pursuant to the authority of the United Nations Participation Act, as amended (22 U.S.C. 287c(b)) (UNPA).



Note 1 to paragraph (a):

Persons whose property and interests in property are blocked pursuant to the authority of the UNPA include those listed on both OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) and the Consolidated United Nations Security Council Sanctions List (see https://www.un.org) as well as persons listed on the SDN List for being owned or controlled by, or acting for or on behalf of, such persons.


(b) Personal communications. The prohibitions contained in this part do not apply to any postal, telegraphic, telephonic, or other personal communication that does not involve the transfer of anything of value.


(c) Information or informational materials. (1) The prohibitions contained in this part do not apply to the importation from any country and the exportation to any country of any information or informational materials, as defined in § 510.312, whether commercial or otherwise, regardless of format or medium of transmission.


(2) This section does not exempt from regulation transactions related to information or informational materials not fully created and in existence at the date of the transactions, or to the substantive or artistic alteration or enhancement of information or informational materials, or to the provision of marketing and business consulting services. Such prohibited transactions include payment of advances for information or 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 or informational materials; and payment of royalties with respect to income received for enhancements or alterations made by U.S. persons to such information or informational materials.


(3) This section does not exempt transactions incident to the exportation of software subject to the Export Administration Regulations, 15 CFR parts 730 through 774, or to the exportation of goods (including software) or technology for use in the transmission of any data, or to the provision, sale, or leasing of capacity on telecommunications transmission facilities (such as satellite or terrestrial network connectivity) for use in the transmission of any data. The exportation of such items or services and the provision, sale, or leasing of such capacity or facilities to a person whose property and interests in property are blocked pursuant to § 510.201(a) are prohibited.


(d) Travel. The prohibitions contained in this part do not apply to transactions ordinarily incident to travel to or from any country, including importation or exportation 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 nonscheduled air, sea, or land voyages.



Note 2 to paragraph (d):

As of September 1, 2017, the U.S. Department of State has restricted the use of U.S. passports to travel into, in, or through North Korea. See 22 CFR 51.63. U.S. nationals who wish to travel to or within North Korea for the extremely limited purposes that are set forth in federal regulations must apply for a passport with a special validation from the Department of State. See travel.state.gov for additional details.


(e) Official business. The prohibitions contained in §§ 510.201(a)(1), 510.201(a)(3)(iv) through (vi) and (d), 510.206, and 510.208 through 510.211 do not apply to transactions for the conduct of the official business of the Federal Government or the United Nations and its Specialized Agencies, Programmes, Funds, and Related Organizations by employees, grantees, or contractors thereof.



Note 3 to paragraph (e):

For an organizational chart listing the Specialized Agencies, Programmes, Funds, and Related Organizations of the United Nations, see the following page on the United Nations website: http://www.unsceb.org/directory.


(f) Exemptions under the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America’s Adversaries Through Sanctions Act and the National Defense Authorization Act for Fiscal Year 2020. The prohibitions contained in §§ 510.201(a)(3)(vii) through (x), 510.210(c), and 510.214 do not apply to the following activities:


(1) Activities subject to the reporting requirements under title V of the National Security Act of 1947 (50 U.S.C. 3091 et seq.), or to any authorized intelligence activities of the United States.


(2) Any transaction necessary to comply with United States obligations under the Agreement between the United Nations and the United States of America regarding the Headquarters of the United Nations, signed at Lake Success June 26, 1947, and entered into force November 21, 1947, or under the Convention on Consular Relations, done at Vienna April 24, 1963, and entered into force March 19, 1967, or under other international agreements.


(3) Any activities incidental to the POW/MIA accounting mission in North Korea, including activities by the Defense POW/MIA Accounting Agency and other governmental or nongovernmental organizations tasked with identifying or recovering the remains of members of the United States Armed Forces in North Korea.


[83 FR 9187, Mar. 5, 2018, as amended at 85 FR 20161, Apr. 10, 2020]


§ 510.214 Prohibitions on persons owned or controlled by U.S. financial institutions.

Except as otherwise authorized pursuant to this part, any person that is owned or controlled by a U.S. financial institution and established or maintained outside the United States is prohibited from knowingly engaging in any transaction directly or indirectly with the Government of North Korea or any person designated for the imposition of sanctions with respect to North Korea described in § 510.201(a)(3)(vii) through (ix) and under an applicable Executive order (as defined in NKSPEA, as amended) or an applicable United Nations Security Council resolution (as defined in NKSPEA, as amended).



Note 1 to § 510.214:

For information regarding persons blocked pursuant to this part, or another part of 31 CFR chapter V in connection with North Korea-related activities, including identifier information for entries on the SDN List, see Note 4 to § 510.201(a).



Note 2 to § 510.214:

A U.S. financial institution is subject to the civil penalties provided for in section 206(b) of the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) if any entity that it owns or controls violates, attempts to violate, conspires to violate, or causes a violation of the prohibitions set forth in this section. See § 510.701.


[85 FR 20161, Apr. 10, 2020]


Subpart C – General Definitions

§ 510.300 Applicability of definitions.

The definitions in this subpart apply throughout the entire part.


§ 510.301 Arms or related materiel.

The term arms or related materiel means arms or related materiel of all types, including any battle tanks, armored combat vehicles, large caliber artillery systems, combat aircraft, attack helicopters, warships, missiles or missile systems, or related materiel including spare parts.



Note 1 to § 510.301:

For additional guidance as to items that constitute arms or related materiel, please see determinations by the United Nations Security Council or its committee created pursuant to United Nations Security Council Resolution 1718, as well as designations by the Secretary of State of defense articles and defense services pursuant to the Arms Export Control Act and listed on the United States Munitions List (USML). In addition, items on the Commerce Control List as well as certain uncontrolled items that are subject to the Export Administration Act may be considered related materiel.


§ 510.302 Blocked account; blocked property.

For the purposes of this part, the terms blocked account and blocked property shall mean:


(a) Any account or property subject to the prohibitions in § 510.201(a) held in the name of the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a), 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 a license or other authorization from OFAC expressly authorizing such action; and


(b) Any account or property subject to the prohibitions in § 510.201(d), and with respect to which payments, transfers, exportations, withdrawals, or other dealings may not be made or effected except pursuant to a license or other authorization from OFAC expressly authorizing such action.



Note 1 to § 510.302:

See § 510.411 concerning the blocked status of property and interests in property of an entity that is directly or indirectly owned, whether individually or in the aggregate, 50 percent or more by one or more persons whose property and interests in property are blocked pursuant to § 510.201(a).


[83 FR 9187, Mar. 5, 2018, as amended at 85 FR 20161, Apr. 10, 2020]


§ 510.303 Correspondent account.

The term correspondent account means an account established by a U.S. financial institution for a foreign financial institution to receive deposits from, or to make payments on behalf of, the foreign financial institution, or to handle other financial transactions related to such foreign financial institution.


§ 510.304 Effective date.

(a) The term effective date refers to the effective date of the applicable prohibitions and directives contained in this part as follows:


(1) With respect to transfers or other dealings in blocked property and interests in property of the Government of North Korea, as defined in § 510.311, or the Workers’ Party of Korea prohibited by § 510.201(a)(1), 12:01 a.m. eastern daylight time, March 16, 2016;


(2) With respect to a person whose property and interests in property are blocked pursuant to § 510.201(a)(3)(i), 12:01 p.m. eastern daylight time, August 30, 2010;


(3) With respect to a person whose property and interests in property are otherwise blocked pursuant to § 510.201(a), the earlier of the date of actual or constructive notice that such person’s property and interests in property are blocked;


(4) With respect to funds subject to blocking pursuant to § 510.201(d), the earlier of the date of actual or constructive notice that funds are blocked or that a foreign bank account that the funds originate from, are destined for, or pass through has been determined to meet the criteria contained in § 510.201(d);


(5) With respect to the prohibition set forth in § 510.207, June 26, 2008;


(6) With respect to the prohibition set forth in § 510.205, 12:01 a.m. eastern daylight time, April 19, 2011;


(7) With respect to the prohibitions set forth in §§ 510.206 and 510.209, 12:01 a.m. eastern daylight time, March 16, 2016;


(8) With respect to the prohibitions set forth in § 510.208, 12:01 a.m. eastern daylight time, September 21, 2017;


(9) With respect to the prohibition set forth in § 510.210(b), 12:01 a.m. eastern daylight time, September 21, 2017. The effective date of a prohibition or strict condition imposed pursuant to § 510.210(b) on the opening or maintaining of a correspondent account or a payable-through account in the United States by a U.S. financial institution for a particular foreign financial institution is the earlier of the date the U.S. financial institution receives actual or constructive notice of such prohibition or condition; and


(10) With respect to the prohibition set forth in § 510.210(c), April 18, 2020. The effective date of a prohibition or strict condition imposed pursuant to § 510.210(c) on the opening or maintaining of a correspondent account or a payable-through account in the United States by a U.S. financial institution for a particular foreign financial institution is the earlier of the date the U.S. financial institution receives actual or constructive notice of such prohibition or condition.


(b) For the purposes of this section, constructive notice is the date that a notice of the blocking of the relevant person’s property and interests in property, or a notice of the imposition of a prohibition or strict condition pursuant to § 510.210, is published in the Federal Register.


[83 FR 9187, Mar. 5, 2018, as amended at 85 FR 20162, Apr. 10, 2020]


§ 510.305 Entity.

The term entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.


§ 510.306 Financial, material, or technological support.

The term financial, material, or technological support, as used in § 510.201(a), means any property, tangible or intangible, including currency, financial instruments, securities, or any other transmission of value; weapons or related materiel; chemical or biological agents; explosives; false documentation or identification; communications equipment; computers; electronic or other devices or equipment; technologies; lodging; safe houses; facilities; vehicles or other means of transportation; or goods. “Technologies” as used in this definition means specific information necessary for the development, production, or use of a product, including related technical data such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, or other recorded instructions.


[83 FR 9187, Mar. 5, 2018, as amended at 85 FR 20162, Apr. 10, 2020]


§ 510.307 Financial services.

The term financial services includes loans, transfers, accounts, insurance, investments, securities, guarantees, foreign exchange, letters of credit, and commodity futures or options.


§ 510.308 Financial transaction.

The term financial transaction means any transfer of value involving a financial institution.


§ 510.309 Foreign financial institution.

The term foreign financial institution means any foreign entity 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. It includes depository institutions, banks, savings banks, money service businesses, 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, dealers in precious metals, stones, or jewels, and holding companies, affiliates, or subsidiaries of any of the foregoing. The term does not include the international financial institutions identified in 22 U.S.C. 262r(c)(2), the International Fund for Agricultural Development, the North American Development Bank, or any other international financial institution so notified by OFAC.


§ 510.310 Foreign person.

The term foreign person means any person that is not a U.S. person.


§ 510.311 Government of North Korea.

The term Government of North Korea includes:


(a) The state and the Government of the Democratic People’s Republic of Korea, as well as any political subdivision, agency, or instrumentality thereof;


(b) Any entity owned or controlled, directly or indirectly, by the foregoing, including any corporation, partnership, association, or other entity in which the Government of North Korea owns a 50 percent or greater interest or a controlling interest, and any entity which is otherwise controlled by that government;


(c) Any person that is, or has been, acting or purporting to act, directly or indirectly, for or on behalf of any of the foregoing; and


(d) Any other person determined by OFAC to be included within paragraphs (a) through (c) of this section.



Note 1 to § 510.311:

The names of persons that OFAC has determined fall within this definition are published in the Federal Register and incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) with the identifier “[DPRK].” The SDN List is accessible through the following page on OFAC’s website: www.treasury.gov/sdn. However, the property and interests in property of persons who meet the definition of the term Government of North Korea are blocked pursuant to § 510.201(a) regardless of whether the names of such persons are published in the Federal Register or incorporated into the SDN List.



Note 2 to § 510.311:

Section 501.807 of this chapter describes the procedures to be followed by persons seeking administrative reconsideration of OFAC’s determination that they fall within the definition of the term Government of North Korea.


§ 510.312 Information or informational materials.

(a)(1) The term information or informational materials includes publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds.


(2) To be considered information or informational materials, artworks must be classified under heading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the United States.


(b) The term information or informational materials, with respect to 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 (1979) (EAA), or section 6 of the EAA to the extent that such controls promote the nonproliferation or antiterrorism policies of the United States; or


(2) With respect to which acts are prohibited by 18 U.S.C. chapter 37.


§ 510.313 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.


§ 510.314 Knowingly.

The term knowingly, with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.


§ 510.315 Licenses; general and specific.

(a) Except as otherwise provided in this part, the term license means any license or authorization contained in or issued pursuant to this part.


(b) The term general license means any license or authorization the terms of which are set forth in subpart E of this part or made available on OFAC’s website: www.treasury.gov/ofac.


(c) The term specific license means any license or authorization issued pursuant to this part, but not set forth in subpart E of this part or made available on OFAC’s website: www.treasury.gov/ofac.



Note 1 to § 510.315:

See § 501.801 of this chapter on licensing procedures.


§ 510.316 Loans or other extensions of credit.

The term loans or other extensions of credit means any transfer or extension of funds or credit on the basis of an obligation to repay, or any assumption or guarantee of the obligation of another to repay an extension of funds or credit, including: Overdrafts; currency swaps; purchases of securities or debt securities, including securities from or issued by the Government of North Korea; purchases of a loan made by another person; sales of financial assets subject to an agreement to repurchase; renewals or refinancings whereby funds or credits are transferred or extended to a prohibited borrower or prohibited recipient; the issuance of standby letters of credit; and drawdowns on existing lines of credit.


§ 510.317 Luxury goods.

The term luxury goods, as used in § 510.201(a) includes those items listed in 15 CFR 746.4(b)(1) and supplement no. 1 to part 746, similar items, and items so designated under an applicable United Nations Security Council resolution (as defined by the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America’s Adversaries Through Sanctions Act and the National Defense Authorization Act for Fiscal Year 2020), except as specifically approved by the United Nations Security Council for import, export, or reexport to or into North Korea.


[85 FR 20162, Apr. 10, 2020]


§ 510.318 New investment.

The term new investment means a transaction after 12:01 a.m. eastern daylight March 16, 2016 that constitutes:


(a) A commitment or contribution of funds or other assets; or


(b) A loan or other extension of credit as defined in § 510.316.


§ 510.319 North Korean person.

(a) The term North Korean person means any North Korean citizen, North Korean permanent resident alien, or entity organized under the laws of North Korea or any jurisdiction within North Korea (including foreign branches).


(b) For the purposes of § 510.201(a), the term North Korean person shall not include any United States citizen, any permanent resident alien of the United States, any alien lawfully admitted to the United States, or any alien holding a valid United States visa.


[83 FR 9187, Mar. 5, 2018, as amended at 85 FR 20162, Apr. 10, 2020]


§ 510.320 OFAC.

The term OFAC means the Department of the Treasury’s Office of Foreign Assets Control.


§ 510.321 Payable-through account.

The term payable-through account means a correspondent account maintained by a U.S. financial institution for a foreign financial institution by means of which the foreign financial institution permits its customers to engage, either directly or through a subaccount, in banking activities usual in connection with the business of banking in the United States.


§ 510.322 Person.

The term person means an individual or entity.


§ 510.323 Property; property interest.

The terms property and property interest include 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.


§ 510.324 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. Without limitation on the foregoing, it 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.


§ 510.325 United States.

The term United States means the United States, its territories and possessions, and all areas under the jurisdiction or authority thereof.


§ 510.326 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.


§ 510.327 U.S. depository institution.

The term U.S. depository institution means any entity (including its foreign branches) organized under the laws of the United States or any jurisdiction within the United States, or any agency, office, or branch located in the United States of a foreign entity, that is engaged primarily in the business of banking (for example, banks, savings banks, savings associations, credit unions, trust companies, and United States bank holding companies) and is subject to regulation by federal or state banking authorities.


§ 510.328 U.S. financial institution.

The term U.S. financial institution means any U.S. entity (including its foreign branches) that is engaged in the business of accepting deposits, making, granting, transferring, holding, or brokering loans or other extensions of credit, or purchasing or selling foreign exchange, securities, commodity futures or options, or procuring purchasers and sellers thereof, as principal or agent. It includes 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 that are located in the United States, but not such institutions’ foreign branches, offices, or agencies.


§ 510.329 U.S.-registered money transmitter.

The term U.S.-registered money transmitter means any U.S. citizen, permanent resident alien, or entity organized under the laws of the United States or of any jurisdiction within the United States, including its foreign branches, or any agency, office, or branch of a foreign entity located in the United States, that is a money transmitter, as defined in 31 CFR 1010.100(ff)(5), and that is registered pursuant to 31 CFR 1022.380.


§ 510.330 U.S.-registered broker or dealer in securities.

The term U.S.-registered broker or dealer in securities means any U.S. citizen, permanent resident alien, or entity organized under the laws of the United States or of any jurisdiction within the United States (including its foreign branches), or any agency, office, or branch of a foreign entity located in the United States, that:


(a) Is a “broker” or “dealer” in securities within the meanings set forth in the Securities Exchange Act of 1934;


(b) Holds or clears customer accounts; and


(c) Is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934.


Subpart D – Interpretations

§ 510.401 Reference to amended sections.

(a) Reference to any section in this part is a reference to the same as currently amended, unless the reference includes a specific date. See 44 U.S.C. 1510.


(b) Reference to any ruling, order, instruction, direction or license issued pursuant to this part is a reference to the same as currently amended unless otherwise so specified.


§ 510.402 Effect of amendment.

Unless otherwise specifically provided, any amendment, modification, or revocation of any provision in or appendix to this part or chapter or of any order, regulation, ruling, instruction, or license issued by OFAC does not affect any act done or omitted, or any civil or criminal 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.


§ 510.403 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 North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a), such property shall no longer be deemed to be property blocked pursuant to § 510.201(a), unless there exists in the property another interest that is blocked pursuant to § 510.201(a), 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 and interests in property are blocked pursuant to § 510.201(a), such property shall be deemed to be property in which such person has an interest and therefore blocked.


§ 510.404 Transactions ordinarily incident to a licensed transaction.

(a) Any transaction ordinarily incident to a licensed transaction and necessary to give effect thereto is also authorized, except:


(1) An ordinarily incident transaction, not explicitly authorized within the terms of the license, by or with the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a);


(2) An ordinarily incident transaction, not explicitly authorized within the terms of the license, involving a debit to a blocked account or a transfer of blocked property; or


(3) An ordinarily incident transaction, not explicitly authorized within the terms of the license, with a foreign financial institution that is subject to sanctions pursuant to § 510.210 when the transaction is one that is prohibited by § 510.210.


(b) For example, a license authorizing a person to complete a securities sale involving Company A, whose property and interests in property are blocked pursuant to § 510.201(a), also authorizes other persons to engage in activities that are ordinarily incident and necessary to complete the sale, including transactions by the buyer, broker, transfer agents, and banks, provided that such other persons are not themselves persons whose property and interests in property are blocked pursuant to § 510.201(a).


§ 510.405 Exportation and reexportation of goods, services, or technology.

(a) The prohibition on the exportation and reexportation of goods, services, or technology contained in § 510.206 applies to services performed on behalf of a person in North Korea or the Government of North Korea or where the benefit of such services is otherwise received in North Korea, if such services are performed:


(1) In the United States; or


(2) Outside the United States by a U.S. person, including by a foreign branch of an entity located in the United States.


(b) The benefit of services performed anywhere in the world on behalf of the Government of North Korea is presumed to be received in North Korea.


(c) The prohibitions contained in § 510.201 apply to services performed in the United States or by U.S. persons, wherever located, including by a foreign branch of an entity located in the United States:


(1) On behalf of or for the benefit of the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a); or


(2) With respect to property interests of the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a).


(d)(1) For example, U.S. persons may not, except as authorized by or pursuant to this part, provide legal, accounting, financial, brokering, freight forwarding, transportation, public relations, or other services to any person in North Korea or to the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a).


(2) For example, a U.S. person is engaged in a prohibited exportation of services to North Korea when it extends credit to a third-country firm specifically to enable that firm to manufacture goods for sale to North Korea or the Government of North Korea.



Note 1 to § 510.405:

See §§ 510.507 and 510.509 on licensing policy with regard to the provision of certain legal and emergency medical services.


§ 510.406 Offshore transactions involving blocked property.

The prohibitions in § 510.201 on transactions or dealings involving blocked property (including a blocked account) apply to transactions by any U.S. person in a location outside the United States with respect to property held in the name of the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a) or any property blocked by § 510.201(d).


§ 510.407 Payments from blocked accounts to satisfy obligations prohibited.

Pursuant to § 510.201, no debits may be made to a blocked account to pay obligations to U.S. persons or other persons, except as authorized by or pursuant to this part.



Note 1 to § 510.407:

See also § 510.502(e), which provides that no license or other authorization contained in or issued pursuant to this part authorizes transfers of or payments from blocked property or debits to blocked accounts unless the license or other authorization explicitly authorizes the transfer of or payment from blocked property or the debit to a blocked account.


§ 510.408 Charitable contributions.

Unless specifically authorized by OFAC pursuant to this part, no charitable contribution of funds, goods, services, or technology, including contributions to relieve human suffering, such as food, clothing, or medicine, may be made by, to, or for the benefit of, or received from, the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a). For the purposes of this part, a contribution is made by, to, or for the benefit of, or received from, the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a) if made by, to, or in the name of, or received from or in the name of, such a person; if made by, to, or in the name of, or received from or in the name of, an entity or individual acting for or on behalf of, or owned or controlled by, such a person; or if made in an attempt to violate, to evade, or to avoid the bar on the provision of contributions by, to, or for the benefit of such a person, or the receipt of contributions from such a person.



Note 1 to § 510.408:

Separate authorization by the Department of Commerce under the Export Administration Regulations (EAR), 15 CFR part 730 through 774, may be required if the charitable contributions are subject to the EAR.


§ 510.409 Credit extended and cards issued by financial institutions to a person whose property and interests in property are blocked.

The prohibition in § 510.201 on dealing in property subject to that section and the prohibition in § 510.206 on exporting services to North Korea prohibit U.S. financial institutions from performing under any existing credit agreements, including charge cards, debit cards, or other credit facilities issued by a financial institution to the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a).


§ 510.410 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 § 510.201 if effected after the effective date.


§ 510.411 Entities owned by one or more persons whose property and interests in property are blocked.

(a) Persons whose property and interests in property are blocked pursuant to § 510.201(a) have an interest in all property and interests in property of an entity in which such persons directly or indirectly own, whether individually or in the aggregate, a 50 percent or greater interest. The property and interests in property of such an entity, therefore, are blocked, and such an entity is a person whose property and interests in property are blocked pursuant to § 510.201(a), regardless of whether the name of the entity is incorporated into OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List).


(b) This section, which deals with the consequences of ownership of entities, in no way limits the definition of the Government of North Korea in § 510.311, which includes within its definition other persons whose property and interests in property are blocked but who are not on the SDN List.


§ 510.412 Facilitation; change of policies and procedures; referral of business opportunities offshore.

With respect to § 510.211, a prohibited facilitation or approval of a transaction by a foreign person occurs, among other instances, when a U.S. person:


(a) Alters its operating policies or procedures, or those of a foreign affiliate, to permit a foreign affiliate to accept or perform a specific contract, engagement, or transaction involving North Korea or the Government of North Korea without the approval of the U.S. person, where such transaction previously required approval by the U.S. person and such transaction by the foreign affiliate would be prohibited by this part if performed directly by a U.S. person or from the United States;


(b) Refers to a foreign person purchase orders, requests for bids, or similar business opportunities involving North Korea or the Government of North Korea to which the United States person could not directly respond as a result of the prohibitions contained in this part; or


(c) Changes the operating policies and procedures of a particular affiliate with the specific purpose of facilitating transactions that would be prohibited by this part if performed by a U.S. person or from the United States.


§ 510.413 Significant activity or activities; significant transaction(s); significant financial service(s).

In determining, for purposes of §§ 510.201(a) and 510.210, whether an activity or activities, transaction(s), or financial service(s) are significant, the Secretary of the Treasury or the Secretary’s designee may consider the totality of the facts and circumstances. As a general matter, the Department of the Treasury may consider some or all of the following factors:


(a) Size, number, and frequency. The size, number, and frequency of the activity or activities, transaction(s), or financial service(s) conducted or performed over a period of time, including whether the activity or activities, transaction(s), or financial service(s) are increasing or decreasing over time and the rate of increase or decrease.


(b) Nature. The nature of the activity or activities, transaction(s), or financial service(s), including the type, complexity, and commercial purpose of the activity or activities, transaction(s), or financial service(s).


(c) Level of awareness; pattern of conduct. (1) Whether the activity or activities, transaction(s), or financial service(s) are performed with the involvement or approval of management or only by clerical personnel; and


(2) Whether the activity or activities, transaction(s), or financial service(s) are part of a pattern of conduct or the result of a business development strategy.


(d) Nexus. The proximity between the foreign financial institution engaging in the activity or activities, transaction(s), or financial service(s) and North Korea or a person blocked pursuant to § 510.201, a person sanctioned pursuant to § 510.210, or trade with North Korea.


(e) Impact. The impact of the activity or activities, transaction(s), or financial service(s) on the relevant U.S. sanctions program objectives including:


(1) The economic or other benefit conferred or attempted to be conferred on North Korea or a person blocked pursuant to § 510.201, or sanctioned pursuant to § 510.210; and


(2) Whether and how the activity or activities, transaction(s), or financial service(s) contribute(s) to North Korea’s nuclear and ballistic missile programs, commission of serious human rights abuses, use of funds generated through international trade to support its nuclear and missile programs and weapons proliferation, money laundering and other illicit activities, procurement of luxury goods, human rights violations, and violations of United Nations Security Council Resolutions.


(f) Deceptive practices. Whether the activity or activities, transaction(s), or financial service(s) involve(s) an attempt to obscure or conceal the actual parties or true nature of the activity or activities, transaction(s), or financial service(s) or to evade sanctions.


(g) Other relevant factors. Such other factors that the Department of the Treasury deems relevant on a case-by-case basis in determining the significance of an activity or activities, transaction(s), or financial service(s).


[85 FR 20162, Apr. 10, 2020]


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

§ 510.501 General and specific licensing procedures.

For provisions relating to licensing procedures, see part 501, subpart E, of this chapter. Licensing actions taken pursuant to part 501 of this chapter with respect to the prohibitions contained in this part are considered actions taken pursuant to this part. General licenses and statements of licensing policy relating to this part also may be available through the North Korea sanctions page on OFAC’s website: www.treasury.gov/ofac.


§ 510.502 Effect of license or other authorization.

(a) No license or other authorization contained in this part, or otherwise issued by OFAC, authorizes or validates any transaction effected prior to the issuance of such license or other authorization, 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 OFAC 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 other part of this chapter unless the regulation, ruling, instruction, or license specifically refers to such part.


(c) Any regulation, ruling, instruction, or license authorizing any transaction otherwise prohibited under this part has the effect of removing a prohibition 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 that would not otherwise exist under ordinary principles of law.


(d) Nothing contained in this part shall be construed to supersede the requirements established under any other provision of law or to relieve a person from any requirement to obtain a license or other authorization from another department or agency of the U.S. Government in compliance with applicable laws and regulations subject to the jurisdiction of that department or agency. For example, exports of goods, services, or technical data that are not prohibited by this part or that do not require a license by OFAC nevertheless may require authorization by the U.S. Department of Commerce, the U.S. Department of State, or other agencies of the U.S. Government.


(e) No license or other authorization contained in or issued pursuant to this part authorizes transfers of or payments from blocked property or debits to blocked accounts unless the license or other authorization explicitly authorizes the transfer of or payment from blocked property or the debit to a blocked account.


(f) Any payment relating to a transaction authorized in or pursuant to this part that is routed through the U.S. financial system should reference the relevant OFAC general or specific license authorizing the payment to avoid the blocking or rejection of the transfer.


§ 510.503 Exclusion from licenses.

OFAC reserves the right to exclude any person, property, transaction, or class thereof from the operation of any license or from the privileges conferred by any license. OFAC also reserves the right to restrict the applicability of any license to particular persons, property, transactions, or classes thereof. Such actions are binding upon actual or constructive notice of the exclusions or restrictions.


§ 510.504 Payments and transfers to blocked accounts in U.S. financial institutions.

Any payment of funds or transfer of credit in which the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a) has any interest that comes within the possession or control of a U.S. financial institution, or any payment of funds or transfer of credit, subject to § 510.201(d) 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 be made only to another blocked account held in the same name.



Note 1 to § 510.504:

See § 501.603 of this chapter for mandatory reporting requirements regarding financial transfers. See also § 510.203 concerning the obligation to hold blocked funds in interest-bearing accounts.


§ 510.505 Entries in certain accounts for normal service charges.

(a) A U.S. financial institution is authorized to debit any blocked account held at that financial institution in payment or reimbursement for normal service charges owed it by the owner of that blocked account.


(b) As used in this section, the term normal service charges shall include charges in payment or reimbursement for interest due; cable, telegraph, internet, 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.


§ 510.506 Investment and reinvestment of certain funds.

Subject to the requirements of § 510.203, U.S. financial institutions are authorized to invest and reinvest assets blocked pursuant to § 510.201, subject to the following conditions:


(a) The assets representing such investments and reinvestments are credited to a blocked account or subaccount that 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 funds shall not be transferred outside the United States for this purpose;


(b) The proceeds of such investments and reinvestments shall not be credited to a blocked account or subaccount under any name or designation that 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 the Government of North Korea or any other person whose property and interests in property are blocked pursuant to § 510.201(a).


§ 510.507 Provision of certain legal services.

(a) The provision of the following legal services to or on behalf of the Government of North Korea, the Workers’ Party of Korea, any other person whose property and interests in property are blocked pursuant to § 510.201(a) or any further Executive orders relating to the national emergency declared in Executive Order 13466 of June 26, 2008, or any person in North Korea, or in circumstances in which the benefit is otherwise received in North Korea, is authorized, provided that receipt of payment of professional fees and reimbursement of incurred expenses must be authorized: Pursuant to § 510.508, which authorizes certain payments for legal services from funds originating outside the United States; via specific license; or otherwise pursuant to this part:


(1) Provision of legal advice and counseling on the requirements of and compliance with the laws of the United States or any jurisdiction within the United States, provided that such advice and counseling are not provided to facilitate transactions in violation of this part;


(2) Representation of persons named as defendants in or otherwise made parties to legal, arbitration, or administrative proceedings before any U.S. federal, state, or local court or agency;


(3) Initiation and conduct of legal, arbitration, or administrative proceedings before any U.S. federal, state, or local court or agency;


(4) Representation of persons before any U.S. federal, state, or local court or agency with respect to the imposition, administration, or enforcement of U.S. sanctions against such persons or North Korea; and


(5) Provision of legal services in any other context in which prevailing U.S. law requires access to legal counsel at public expense.


(b) The provision of any other legal services to or on behalf of the Government of North Korea, the Workers’ Party of Korea, any other person whose property and interests in property are blocked pursuant to § 510.201(a) or any further Executive orders relating to the national emergency declared in Executive Order 13466 of June 26, 2008, or any person in North Korea, or in circumstances in which the benefit is otherwise received in North Korea, not otherwise authorized in this part, requires the issuance of a specific license.


(c) Consistent with § 510.404, U.S. persons do not need to obtain specific authorization to provide related services, such as making filings and providing other administrative services, that are ordinarily incident to the provision of services authorized by paragraph (a) of this section. Additionally, U.S. persons who provide services authorized by paragraph (a) of this section do not need to obtain specific authorization to contract for related services that are ordinarily incident to the provision of those legal services, such as those provided by private investigators or expert witnesses, or to pay for such services.


(d) Entry into a settlement agreement 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 property or interests in property blocked pursuant to § 510.201, or any further Executive orders relating to the national emergency declared in Executive Order 13466 of June 26, 2008, is prohibited unless licensed pursuant to this part.



Note 1 to § 510.507:

Pursuant to part 501, subpart E, of this chapter, U.S. persons seeking administrative reconsideration or judicial review of their designation or the blocking of their property and interests in property may apply for a specific license from OFAC to authorize the release of certain blocked funds for the payment of professional fees and reimbursement of incurred expenses for the provision of such legal services where alternative funding sources are not available. For more information, see OFAC’s Guidance on the Release of Limited Amounts of Blocked Funds for Payment of Legal Fees and Costs Incurred in Challenging the Blocking of U.S. Persons in Administrative or Civil Proceedings, which is available on OFAC’s website at: www.treasury.gov/ofac.


§ 510.508 Payments for legal services from funds originating outside the United States.

(a) Professional fees and incurred expenses. Receipt of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 510.507(a) to or on behalf of the Government of North Korea, the Workers’ Party of Korea, any other person whose property and interests in property are blocked pursuant to § 510.201(a) or any further Executive orders relating to the national emergency declared in Executive Order 13466 of June 26, 2008, or any person in North Korea, or in circumstances in which the benefit is otherwise received in North Korea, is authorized from funds originating outside the United States, provided that the funds received by U.S. persons as payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 510.507(a) do not originate from:


(1) A source within the United States;


(2) Any source, wherever located, within the possession or control of a U.S. person; or


(3) Any individual or entity, other than the person on whose behalf the legal services authorized pursuant to § 510.507(a) are to be provided, whose property and interests in property are blocked pursuant to any part of this chapter or any Executive order or statute.



Note 1 to paragraph (a):

Nothing in this paragraph (a) authorizes payments for legal services using funds in which any other person whose property and interests in property are blocked pursuant to § 510.201(a), any other part of this chapter, or any Executive order has an interest.


(b) Reports. (1) U.S. persons who receive payments pursuant to paragraph (a) of this section must submit annual reports no later than 30 days following the end of the calendar year during which the payments were received providing information on the funds received. Such reports shall specify:


(i) The individual or entity from whom the funds originated and the amount of funds received; and


(ii) If applicable:


(A) The names of any individuals or entities providing related services to the U.S. person receiving payment in connection with authorized legal services, such as private investigators or expert witnesses;


(B) A general description of the services provided; and


(C) The amount of funds paid in connection with such services.


(2) The reports, which must reference this section, are to be submitted to OFAC using one of the following methods:


(i) Email (preferred method): [email protected]; or


(ii) U.S. mail: OFAC Regulations Reports, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman’s Bank Building, Washington, DC 20220.


§ 510.509 Emergency medical services.

The provision and receipt of nonscheduled emergency medical services that are otherwise prohibited by this part or any further Executive orders relating to the national emergency declared in Executive Order 13466 of June 26, 2008 are authorized.


§ 510.510 North Korean mission to the United Nations and employees of the United Nations.

(a) Except as provided in paragraph (c) of this section, the provision of goods or services in the United States to the official mission of the Government of North Korea to the United Nations (the mission) and payment for such goods or services are authorized, provided that:


(1) The goods or services are for the conduct of the official business of the mission, or for personal use of the employees of the mission, their families, or persons forming part of their household, and are not for resale;


(2) The transaction does not involve the purchase, sale, financing, or refinancing of real property;


(3) The transaction does not involve the purchase, sale, financing, or refinancing of luxury goods;


(4) The transaction is not otherwise prohibited by law; and


(5) Funds transfers to or from the mission or the employees of the mission, their families, or persons forming part of their household are conducted through an account at a U.S. financial institution specifically licensed by OFAC.


(b) Except as provided in paragraph (c) of this section, the provision of goods or services in the United States to the employees of the mission or of the United Nations, their families, or persons forming part of their household, and payment for such goods or services, are authorized, provided that:


(1) The goods or services are for personal use of the employees of the mission or of the United Nations, their families, or persons forming part of their household, and are not for resale;


(2) The transaction does not involve the purchase, sale, financing, or refinancing of luxury goods;


(3) The transaction is not otherwise prohibited by law; and


(4) Funds transfers to or from employees of the mission, their families, or persons forming part of their household are conducted through an account at a U.S. financial institution specifically licensed by OFAC.


(c) This section does not authorize U.S. financial institutions to open and operate accounts for, or extend credit to, the mission of the Government of North Korea or to the employees of the mission, their families, or persons forming part of their household. U.S. financial institutions are required to obtain specific licenses to operate accounts for, or extend credit to, the mission or to the employees of the mission, their families, or persons forming part of their household.



Note 1 to § 510.510:

Nothing in this section authorizes the transfer of any property to the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a) other than the mission, nor does this section authorize any debit to a blocked account.


§ 510.511 Noncommercial, personal remittances.

(a)(1) U.S. persons are authorized to send and receive and U.S. depository institutions, U.S.-registered brokers or dealers in securities, and U.S.-registered money transmitters are authorized to process transfers of funds to or from North Korea or for or on behalf of an individual ordinarily resident in North Korea, other than an individual whose property and interests in property are blocked pursuant to § 510.201(a), in cases in which the transfers involve noncommercial, personal remittances, up to a maximum of $5,000 per year.


(2) Noncommercial, personal remittances do not include charitable donations of funds to or for the benefit of an entity or funds transfers for use in supporting or operating a business, including a family-owned business.


(b) The transferring institutions identified in paragraph (a) of this section may rely on the originator of a funds transfer with regard to compliance with paragraph (a) of this section, provided that the transferring institution does not know or have reason to know that the funds transfer is not in compliance with paragraph (a) of this section.


(c) An individual who is a U.S. person is authorized to carry funds as a noncommercial, personal remittance, as described in paragraph (a) of this section, to an individual in North Korea or ordinarily resident in North Korea, other than an individual whose property and interests in property are blocked pursuant to § 510.201(a), provided that the individual who is a U.S. person is carrying the funds on his or her behalf, not on behalf of another person.


§ 510.512 Certain services in support of nongovernmental organizations’ activities.

(a) Nongovernmental organizations are authorized to export or reexport services to North Korea that would otherwise be prohibited by this part in support of the following not-for-profit activities:


(1) Activities to support humanitarian projects to meet basic human needs in North Korea, including drought, flood, and disaster relief; the distribution of food, medicine, and clothing intended to be used to relieve human suffering; the provision of shelter; the provision of clean water, sanitation, and hygiene assistance; the provision of health-related services; assistance for individuals with disabilities; and environmental programs;


(2) Activities to support democracy building in North Korea, including rule of law, citizen participation, government accountability, universal human rights and fundamental freedoms, access to information, and civil society development projects;


(3) Activities to support non-commercial development projects directly benefiting the North Korean people, including preventing infectious disease and promoting maternal/child health, sustainable agriculture, and clean water assistance; and


(4) Activities to support environmental protection, including the preservation and protection of threatened or endangered species and the remediation of pollution or other environmental damage.


(b) Nongovernmental organizations are authorized to export or reexport to North Korea from a third country food, as defined in paragraph (f)(1) of this section, and medicine, as defined in paragraph (f)(2) of this section, in support of the activities authorized in paragraph (a) of this section, provided that the food and medicine are not subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR). For export or reexport by a U.S. person to North Korea from a third country of other items that are not subject to the EAR, a specific license from OFAC is required.



Note 1 to paragraph (b):

Pursuant to 15 CFR 746.4(a), a license from the Department of Commerce is required to export or reexport any item subject to the EAR to North Korea, except food and medicine designated as EAR99.



Note 2 to paragraphs (a) and (b):

The authorizations in paragraphs (a) and (b) of this section do not eliminate the need to comply with other applicable provisions of law, including any requirements of agencies other than the Department of the Treasury’s Office of Foreign Assets Control. Such requirements include the EAR administered by the Department of Commerce and the International Traffic in Arms Regulations (22 CFR parts 120 through 130) administered by the Department of State.


(c) U.S. depository institutions, U.S.-registered brokers or dealers in securities, and U.S.-registered money transmitters are authorized to process transfers of funds on behalf of U.S. or third-country nongovernmental organizations, including transfers of funds to or from North Korea, in support of the activities authorized by paragraphs (a) and (b) of this section.


(d) Nongovernmental organizations are authorized to engage in transactions with the Government of North Korea that are necessary for the activities authorized by paragraphs (a) and (b) of this section, including payment of reasonable and customary taxes, fees, and import duties to, and purchase or receipt of permits, licenses, or public utility services from, the Government of North Korea.



Note 3 to paragraph (d):

This paragraph (d) only authorizes nongovernmental organizations to conduct limited transactions with the Government of North Korea that are necessary for the activities described in paragraphs (a) and (b) of this section, such as payment of reasonable and customary taxes and other fees. Partnerships and partnership agreements between nongovernmental organizations and the Government of North Korea or other blocked persons that are necessary for nongovernmental organizations to provide authorized services are not permitted without a specific license from OFAC.


(e) Except as authorized in paragraph (d) of this section, this section does not authorize the exportation or reexportation of services to, charitable donations to or for the benefit of, or any other transactions involving the Government of North Korea, the Workers’ Party of Korea, or any other person whose property and interests in property are blocked pursuant to § 510.201(a). Specific licenses may be issued on a case-by-case basis for these purposes.


(f)(1) For purposes of this section, the term food means items that are consumed by and provide nutrition to humans and animals, and seeds, with the exception of castor bean seeds, that germinate into items that will be consumed by and provide nutrition to humans and animals. Examples of “food” include processed or unprocessed food items for human consumption, feed, vitamins, minerals, food additives, dietary supplements, and containers of drinking water. The term food does not include livestock, cigarettes, alcoholic beverages, gum, castor beans, castor bean seeds, certified pathogen-free eggs (unfertilized or fertilized), dried egg albumin, live animals (excluding cattle embryos), Rosary/Jequirity peas, non-food-grade gelatin powder, peptones and their derivatives, super absorbent polymers, western red cedar, and all fertilizers.


(2) The term medicine means an item that falls within the definition of the term “drug” in section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) and that, in the case of an item subject to the EAR, is designated as EAR99 or, in the case of an item not subject to the EAR, is not listed under any multilateral export control regime.


§ 510.513 Official business of the Federal Government.

All transactions otherwise prohibited by the provisions of this part, other than §§ 510.201(a)(1), (a)(3)(iv) through (vi), and (d), 510.206, and 510.208 through 510.211, that are for the conduct of the official business of the Federal Government by employees, grantees, or contractors thereof are authorized.



Note 1 to § 510.513:

Section 510.213(e) exempts transactions for the conduct of the official business of the Federal Government by employees, grantees, or contractors thereof to the extent such transactions are subject to the prohibitions contained in §§ 510.201(a)(1), (a)(3)(iv) through (vi), and (d), 510.206, and 510.208 through 510.211.


§ 510.514 Official activities of international organizations.

All transactions and activities otherwise prohibited by the provisions of this part, other than §§ 510.201(a)(1), (a)(3)(iv) through (vi), and (d), 510.206, and 510.208 through 510.211, that are for the conduct of the official business of the United Nations and its Specialized Agencies, Programmes, Funds, and Related Organizations by employees, contractors, or grantees thereof are authorized.



Note 1 to § 510.514:

For an organizational chart listing the Specialized Agencies, Programmes, Funds, and Related Organizations of the United Nations, see the following page on the United Nations website: http://www.unsceb.org/directory.



Note 2 to § 510.514:

Section 510.213(e) exempts transactions for the conduct of the official business of the United Nations by employees, grantees, or contractors thereof to the extent such transactions are subject to the prohibitions contained in §§ 510.201(a)(1), (a)(3)(iv) through (vi), and (d), 510.206, and 510.208 through 510.211.



Note 3 to § 510.514:

Separate authorization from the Department of Commerce may be required for the export or reexport of items related to such transactions and activities, if the items are subject to the Export Administration Regulations, 15 CFR parts 730 through 744.


§ 510.515 Third-country diplomatic and consular funds transfers.

(a) Except as provided in paragraph (b) of this section, U.S. depository institutions, U.S.-registered brokers or dealers in securities, and U.S.-registered money transmitters are authorized to process funds transfers necessary for the operating expenses or other official business of third-country diplomatic or consular missions in North Korea.


(b) This section does not authorize funds transfers involving accounts blocked pursuant to § 510.201(d).


§ 510.516 Transactions related to telecommunications and mail.

(a)(1) Except as provided in paragraph (a)(2) of this section, all transactions necessary for the receipt and transmission of telecommunications involving North Korea are authorized.


(2) This section does not authorize:


(i) The provision, sale, or lease of telecommunications equipment or technology; or


(ii) The provision, sale, or lease of capacity on telecommunications transmission facilities (such as satellite or terrestrial network connectivity).


(b) All transactions of common carriers incident to the receipt or transmission of mail and packages between the United States and North Korea are authorized provided that the importation or exportation of such mail and packages is exempt from or authorized pursuant to this part.


§ 510.517 Certain transactions related to patents, trademarks, copyrights, and other intellectual property.

(a) All of the following transactions in connection with a patent, trademark, copyright, or other form of intellectual property protection in the United States or North Korea are authorized, including exportation of services to North Korea, payment for such services, and payment to persons in North Korea directly connected to such intellectual property protection:


(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 any opposition or infringement proceeding with respect to a patent, trademark, copyright, or other form of intellectual property protection, or the entrance of a defense to any such proceeding.


(b) This section authorizes the payment of fees to the U.S. Government or the Government of North Korea, and of the reasonable and customary fees and charges to attorneys or representatives within the United States or North Korea, in connection with the transactions authorized in paragraph (a) of this section, except that payment effected pursuant to the terms of this paragraph (b) may not be made from a blocked account.


§ 510.518 Calling of certain vessels and landing of certain aircraft.

(a) Vessels and aircraft in which a foreign person has an interest that have called or landed at a port or place in North Korea within the previous 180 days, and vessels in which a foreign person has an interest that have engaged in a ship-to-ship transfer with such a vessel within the previous 180 days, are authorized to call or land at a port or place in the United States in the following circumstances only:


(1) The vessel is in distress and seeks refuge in the United States;


(2) The vessel’s call at a port in North Korea was due solely to its distress and the resulting need to seek refuge;


(3) The aircraft is engaging in a nontraffic stop or an emergency landing in the United States; or


(4) The aircraft’s landing in North Korea was due solely to an emergency landing.


(b) For purposes of this section, a nontraffic stop includes a stop for any purpose other than taking on or discharging cargo, passengers, or mail.


§ 510.519 Transactions related to closing a correspondent or payable-through account.

(a) During the 10-day period beginning on the effective date of the prohibition in § 510.210 on the opening or maintaining of a correspondent account or a payable-through account for a foreign financial institution listed on the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), U.S. financial institutions that maintain correspondent accounts or payable-through accounts for the foreign financial institution are authorized to:


(1) Process only those transactions through the account, or permit the foreign financial institution to execute only those transactions through the account, that are for the purpose of, and necessary for, closing the account; and


(2) Transfer the funds remaining in the correspondent account or the payable-through account to an account of the foreign financial institution located outside of the United States and close the correspondent account or the payable-through account.


(b) A report must be filed with OFAC within 30 days of the closure of an account, providing full details on the closing of each correspondent account or payable-through account maintained by a U.S. financial institution for a foreign financial institution whose name is added to the CAPTA List. Such report must include complete information on the closing of the account and on all transactions processed or executed through the account pursuant to this section, including the account outside of the United States to which funds remaining in the account were transferred. The reports, which must reference this section, are to be submitted to OFAC using one of the following methods:


(1) Email (preferred method): [email protected]; or


(2) U.S. mail: Attention: Office of Compliance and Enforcement, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Freedman’s Bank Building, Washington, DC 20220.


(c) Specific licenses may be issued on a case-by-case basis to authorize transactions outside the scope or time period authorized in paragraph (a) of this section by a U.S. financial institution with respect to a correspondent account or a payable-through account maintained by the U.S. financial institution for a foreign financial institution whose name is added to the CAPTA List. License applications should be filed in conformance with § 501.801 of the Reporting, Procedures and Penalties Regulations, 31 CFR part 501.


(d) Nothing in this section authorizes the opening of a correspondent account or a payable-through account for a foreign financial institution whose name appears on the CAPTA List.



Note 1 to § 510.519:

This section does not authorize a U.S. financial institution to unblock property or interests in property, or to engage in any transaction or dealing in property or interests in property, blocked pursuant to any other part of this chapter in the process of closing a correspondent account or a payable-through account for a foreign financial institution whose name has been added to the CAPTA List. See § 510.101.


[83 FR 9187, Mar. 5, 2018, as amended at 84 FR 30870, June 28, 2019]


Subpart F – Reports

§ 510.601 Records and reports.

For provisions relating to required records and reports, see part 501, subpart C, of this chapter. Recordkeeping and reporting requirements imposed by part 501 of this chapter with respect to the prohibitions contained in this part are considered requirements arising pursuant to this part.


Subpart G – Penalties and Finding of Violation

§ 510.701 Penalties.

(a) Section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) (IEEPA) is applicable to violations of the provisions of any license, ruling, regulation, order, directive, or instruction issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under IEEPA.


(1) A civil penalty not to exceed the amount set forth in section 206 of IEEPA may be imposed on any person who violates, attempts to violate, conspires to violate, or causes a violation of any license, order, regulation, or prohibition issued under IEEPA.


(2) IEEPA provides for a maximum civil penalty not to exceed the greater of $330,947 or an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed.


(3) A person who willfully commits, willfully attempts to commit, willfully conspires to commit, or aids or abets in the commission of a violation of any license, order, regulation, or prohibition may, upon conviction, be fined not more than $1,000,000, or if a natural person, be imprisoned for not more than 20 years, or both.


(b)(1) The civil penalties provided in IEEPA are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).


(2) The criminal penalties provided in IEEPA are subject to adjustment pursuant to 18 U.S.C. 3571.


(c) Pursuant to 18 U.S.C. 1001, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the government of the United States, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact; or makes any materially false, fictitious, or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry shall be fined under title 18, United States Code, imprisoned, or both.


(d) Section 5 of the United Nations Participation Act, as amended (22 U.S.C. 287c(b)) (UNPA), provides that any person who willfully violates or evades or attempts to violate or evade any order, rule, or regulation issued by the President pursuant to the authority granted in that section, upon conviction, shall be fined not more than $10,000 and, if a natural person, may also be imprisoned for not more than 10 years; and the officer, director, or agent of any corporation who knowingly participates in such violation or evasion shall be punished by a like fine, imprisonment, or both and any property, funds, securities, papers, or other articles or documents, or any vessel, together with her tackle, apparel, furniture, and equipment, or vehicle, or aircraft, concerned in such violation shall be forfeited to the United States.


(e) Violations involving transactions described at section 203(b)(1), (3), and (4) of IEEPA shall be subject only to the penalties set forth in paragraph (d) of this section.


(f) Violations of this part may also be subject to other applicable laws.


[83 FR 9187, Mar. 5, 2018, as amended at 84 FR 27716, June 14, 2019; 85 FR 19886, Apr. 9, 2020; 86 FR 14536, Mar. 17, 2021; 87 FR 7371, Feb. 9, 2022]


§ 510.702 Pre-Penalty Notice; settlement.

(a) When required. If OFAC has reason 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, directive, 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 (50 U.S.C. 1705) (IEEPA) and determines that a civil monetary penalty is warranted, OFAC will issue a Pre-Penalty Notice informing the alleged violator of the agency’s intent to impose a monetary penalty. A Pre-Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued whether or not another agency has taken any action with respect to the matter. For a description of the contents of a Pre-Penalty Notice, see appendix A to part 501 of this chapter.


(b) Response – (1) Right to respond. An alleged violator has the right to respond to a Pre-Penalty Notice by making a written presentation to OFAC. For a description of the information that should be included in such a response, see appendix A to part 501 of this chapter.


(2) Deadline for response. A response to a Pre-Penalty Notice must be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit a response within 30 days shall be deemed to be a waiver of the right to respond.


(i) Computation of time for response. A response to a Pre-Penalty Notice must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to OFAC by courier) on or before the 3