| Page Range | 81752-81759 | |
| FR Document | 2015-32881 |
[Federal Register Volume 80, Number 251 (Thursday, December 31, 2015)] [Rules and Regulations] [Pages 81752-81759] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-32881] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Part 578 Cyber-Related Sanctions Regulations AGENCY: Office of Foreign Assets Control, Treasury. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Department of the Treasury's Office of Foreign Assets Control (OFAC) is issuing regulations to implement Executive Order 13694 of April 1, 2015 (``Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities''). OFAC intends to supplement this part 578 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy. DATES: Effective: December 31, 2015. FOR FURTHER INFORMATION CONTACT: The Department of the Treasury's Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.: 202-622-4855, Assistant [[Page 81753]] Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410. SUPPLEMENTARY INFORMATION: Electronic and Facsimile Availability This document and additional information concerning OFAC are available from OFAC's Web site (www.treasury.gov/ofac). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622- 0077. Background On April 1, 2015, the President issued Executive Order 13694 (80 FR 18077, April 2, 2015) (E.O. 13694), invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701- 1706). OFAC is issuing the Cyber-Related Sanctions Regulations, 31 CFR part 578 (the ``Regulations''), to implement E.O. 13694, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13694. A copy of E.O. 13694 appears in Appendix A to this part. The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 578 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, including regarding ``cyber-enabled'' activities, and additional general licenses and statements of licensing policy. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations. Public Participation Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply. Paperwork Reduction Act The collections of information related to the Regulations are contained in 31 CFR part 501 (the ``Reporting, Procedures and Penalties Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under 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 the collection of information displays a valid control number. List of Subjects in 31 CFR Part 578 Administrative practice and procedure, Banking, Banks, Blocking of assets, Brokers, Credit, Critical infrastructure, Cyber, Cybersecurity, Foreign trade, Investments, Loans, Securities, Services, Trade secrets. For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control adds part 578 to 31 CFR chapter V to read as follows: PART 578--CYBER-RELATED SANCTIONS REGULATIONS Subpart A--Relation of This Part to Other Laws and Regulations Sec. 578.101 Relation of this part to other laws and regulations. Subpart B--Prohibitions 578.201 Prohibited transactions. 578.202 Effect of transfers violating the provisions of this part. 578.203 Holding of funds in interest-bearing accounts; investment and reinvestment. 578.204 Expenses of maintaining blocked property; liquidation of blocked property. Subpart C--General Definitions 578.300 Applicability of definitions. 578.301 Blocked account; blocked property. 578.302 Effective date. 578.303 Entity. 578.304 Financial, material, or technological support. 578.305 Interest. 578.306 Licenses; general and specific. 578.307 OFAC. 578.308 Person. 578.309 Property; property interest. 578.310 Transfer. 578.311 United States. 578.312 United States person; U.S. person. 578.313 U.S. financial institution. Subpart D--Interpretations 578.401 [Reserved] 578.402 Effect of amendment. 578.403 Termination and acquisition of an interest in blocked property. 578.404 Transactions ordinarily incident to a licensed transaction. 578.405 Setoffs prohibited. 578.406 Entities owned by persons whose property and interests in property are blocked. Subpart E--Licenses, Authorizations, and Statements of Licensing Policy 578.501 General and specific licensing procedures. 578.502 [Reserved] 578.503 Exclusion from licenses. 578.504 Payments and transfers to blocked accounts in U.S. financial institutions. 578.505 Entries in certain accounts for normal service charges authorized. 578.506 Provision of certain legal services authorized. 578.507 Payments for legal services from funds originating outside the United States authorized. 578.508 Authorization of emergency medical services. Subparts F-G--[Reserved] Subpart H--Procedures 578.801 [Reserved] 578.802 Delegation by the Secretary of the Treasury. Subpart I--Paperwork Reduction Act 578.901 Paperwork Reduction Act notice. Appendix A to Part 578--Executive Order 13694 Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); E.O. 13694, 80 FR 18077, April 2, 2015. Subpart A--Relation of This Part to Other Laws and Regulations Sec. 578.101 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. Note to Sec. 578.101: This part has been published in abbreviated form for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, including regarding ``cyber- enabled'' [[Page 81754]] activities, and additional general licenses and statements of licensing policy. Subpart B--Prohibitions Sec. 578.201 Prohibited transactions. All transactions prohibited pursuant to Executive Order 13694 of April 1, 2015, are also prohibited pursuant to this part. Note 1 to Sec. 578.201: The names of persons designated pursuant to Executive Order 13694, whose property and interests in property therefore are blocked pursuant to this section, are published in the Federal Register and incorporated into OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) with the identifier ``[CYBER].'' The SDN List is accessible through the following page on OFAC's Web site: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in Appendix A to this chapter. See Sec. 578.406 concerning entities that may not be listed on the SDN List but whose property and interests in property are nevertheless blocked pursuant to this section. Note 2 to Sec. 578.201: 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 this section also are published in the Federal Register and incorporated into the SDN List with the identifier ``[BPI-CYBER]''. Note 3 to Sec. 578.201: 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, or administrative reconsideration of their status as persons whose property and interests in property are blocked pursuant to this section. Sec. 578.202 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 interest in property blocked pursuant to Sec. 578.201, is null and void and shall not be the basis for the assertion or recognition of any interest in or right, remedy, power, or privilege with respect to such property or property interest. (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 interest in property blocked pursuant to Sec. 578.201, 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 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 Sec. 578.201. Sec. 578.203 Holding of funds in interest-bearing accounts; investment and reinvestment. (a) Except as provided in paragraphs (e) or (f) of this section, or as otherwise directed by OFAC, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to Sec. 578.201 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 Sec. 578.201 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 paragraphs (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 Sec. 578.201 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 [[Page 81755]] 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 immediate financial or economic benefit or access to any person whose property and interests in property are blocked pursuant to Sec. 578.201, nor may their holder cooperate in or facilitate the pledging or other attempted use as collateral of blocked funds or other assets. Sec. 578.204 Expenses of maintaining blocked 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 Sec. 578.201 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 Sec. 578.201 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. Subpart C--General Definitions Sec. 578.300 Applicability of definitions. The definitions in this subpart apply throughout the entire part. Sec. 578.301 Blocked account; blocked property. The terms blocked account and blocked property shall mean any account or property subject to the prohibitions in Sec. 578.201 held in the name of a person whose property and interests in property are blocked pursuant to Sec. 578.201, or in which such person has an interest, and with respect to which payments, transfers, exportations, withdrawals, or other dealings may not be made or effected except pursuant to a license or other authorization from OFAC expressly authorizing such action. Note to Sec. 578.301: See Sec. 578.406 concerning the blocked status of property and interests in property of an entity that is 50 percent or more owned by persons whose property and interests in property are blocked pursuant to Sec. 578.201. Sec. 578.302 Effective date. The term effective date refers to the effective date of the applicable prohibitions and directives contained in this part, and, with respect to a person whose property and interests in property are blocked pursuant to Sec. 578.201, is the earlier of the date of actual or constructive notice that such person's property and interests in property are blocked. Sec. 578.303 Entity. The term entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization. Sec. 578.304 Financial, material, or technological support. The term financial, material, or technological support, as used in Executive Order 13694 of April 1, 2015, means any property, tangible or intangible, including but not limited to 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. Sec. 578.305 Interest. Except as otherwise provided in this part, the term interest, when used with respect to property (e.g., ``an interest in property''), means an interest of any nature whatsoever, direct or indirect. Sec. 578.306 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 Web site: 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 Web site: www.treasury.gov/ofac. Note to Sec. 578.306: See Sec. 501.801 of this chapter on licensing procedures. Sec. 578.307 OFAC. The term OFAC means the Department of the Treasury's Office of Foreign Assets Control. Sec. 578.308 Person. The term person means an individual or entity. Sec. 578.309 Property; property interest. The terms property and property interest include, but are not limited to, money, checks, drafts, bullion, bank deposits, savings accounts, debts, indebtedness, obligations, notes, guarantees, debentures, stocks, bonds, coupons, any other financial instruments, bankers acceptances, mortgages, pledges, liens or other rights in the nature of security, warehouse receipts, bills of lading, trust receipts, bills of sale, any other evidences of title, ownership or indebtedness, letters of credit and any documents relating to any rights or obligations thereunder, powers of attorney, goods, wares, merchandise, chattels, stocks on hand, ships, goods on ships, real estate mortgages, deeds of trust, vendors' sales agreements, land contracts, leaseholds, ground rents, real estate and any other interest therein, options, negotiable instruments, trade acceptances, royalties, book accounts, accounts payable, judgments, patents, trademarks or copyrights, insurance policies, safe deposit boxes and their contents, annuities, pooling agreements, services of any nature whatsoever, contracts of any nature whatsoever, and any other property, real, personal, or mixed, tangible or intangible, or interest or interests therein, present, future, or contingent. Sec. 578.310 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 [[Page 81756]] any agent, trustee, or fiduciary; the creation or transfer of any lien; the issuance, docketing, or filing of, or levy of or under, any judgment, decree, attachment, injunction, execution, or other judicial or administrative process or order, or the service of any garnishment; the acquisition of any interest of any nature whatsoever by reason of a judgment or decree of any foreign country; the fulfillment of any condition; the exercise of any power of appointment, power of attorney, or other power; or the acquisition, disposition, transportation, importation, exportation, or withdrawal of any security. Sec. 578.311 United States. The term United States means the United States, its territories and possessions, and all areas under the jurisdiction or authority thereof. Sec. 578.312 United States person; U.S. person. The term United States person or U.S. person means any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States. Sec. 578.313 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 credits, or purchasing or selling foreign exchange, securities, or 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. Subpart D--Interpretations Sec. 578.401 [Reserved] Sec. 578.402 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. Sec. 578.403 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 a person whose property and interests in property are blocked pursuant to Sec. 578.201, such property shall no longer be deemed to be property blocked pursuant to Sec. 578.201, unless there exists in the property another interest that is blocked pursuant to Sec. 578.201, the transfer of which has not been effected pursuant to license or other authorization. (b) Unless otherwise specifically provided in a license or other 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 Sec. 578.201, such property shall be deemed to be property in which such a person has an interest and therefore blocked. Sec. 578.404 Transactions ordinarily incident to a licensed transaction. Any transaction ordinarily incident to a licensed transaction and necessary to give effect thereto is also authorized, except: (a) An ordinarily incident transaction, not explicitly authorized within the terms of the license, by or with a person whose property and interests in property are blocked pursuant to Sec. 578.201; or (b) 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. Sec. 578.405 Setoffs prohibited. A setoff against blocked property (including a blocked account), whether by a U.S. bank or other U.S. person, is a prohibited transfer under Sec. 578.201 if effected after the effective date. Sec. 578.406 Entities owned by persons whose property and interests in property are blocked. Persons whose property and interests in property are blocked pursuant to Sec. 578.201 have an interest in all property and interests in property of an entity in which such blocked persons own, whether individually or in the aggregate, directly or indirectly, 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 Sec. 578.201, regardless of whether the name of the entity is incorporated into OFAC's Specially Designated Nationals and Blocked Persons List (SDN List). Subpart E--Licenses, Authorizations, and Statements of Licensing Policy Sec. 578.501 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 Cyber-Related sanctions page on OFAC's Web site: www.treasury.gov/ofac. Sec. 578.502 [Reserved] Sec. 578.503 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. Sec. 578.504 Payments and transfers to blocked accounts in U.S. financial institutions. Any payment of funds or transfer of credit in which a person whose property and interests in property are blocked pursuant to Sec. 578.201 has any interest that comes within the possession or control of a U.S. financial institution must be blocked in an account on the books of that financial institution. A transfer of funds or credit by a U.S. financial institution between blocked accounts in its branches or offices is authorized, provided that no transfer is made from an account within the [[Page 81757]] 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 to Sec. 578.504: See Sec. 501.603 of this chapter for mandatory reporting requirements regarding financial transfers. See also Sec. 578.203 concerning the obligation to hold blocked funds in interest-bearing accounts. Sec. 578.505 Entries in certain accounts for normal service charges authorized. (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. Sec. 578.506 Provision of certain legal services authorized. (a) The provision of the following legal services to or on behalf of persons whose property and interests in property are blocked pursuant to Sec. 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, is authorized, provided that receipt of payment of professional fees and reimbursement of incurred expenses must be specifically licensed, authorized pursuant to Sec. 578.507, which authorizes certain payments for legal services from funds originating outside the United States, or otherwise authorized 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; 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 persons whose property and interests in property are blocked pursuant to Sec. 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, not otherwise authorized in this part, requires the issuance of a specific license. (c) 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 Sec. 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015, is prohibited unless licensed pursuant to this part. Note to Sec. 578.506: 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 a limited amount of blocked funds for the payment of legal fees 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 Web site: www.treasury.gov/ofac. Sec. 578.507 Payments for legal services from funds originating outside the United States authorized. (a) Receipts of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to Sec. 578.506(a) to or on behalf of any person whose property and interests in property are blocked pursuant to Sec. 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694, of April 1, 2015, are 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 Sec. 578.506(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 Sec. 578.506(a) are to be provided, whose property and interests in property are blocked pursuant to any part of this chapter or any Executive order. Note to paragraph (a) of Sec. 578.507: This paragraph authorizes the blocked person on whose behalf the legal services authorized pursuant to Sec. 578.506(a) are to be provided to make payments for authorized legal services using funds originating outside the United States that were not previously blocked. Nothing in this paragraph authorizes payments for legal services using funds in which any other person whose property and interests in property are blocked pursuant to Sec. 578.201, any other part of this chapter, or any Executive order has an interest. (b) Reports. (1) U.S. persons who receive payments in connection with legal services authorized pursuant to Sec. 578.506(a) 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 mailed to: Licensing Division, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., Annex, Washington, DC 20220. Note to Sec. 578.507: U.S. persons who receive payments in connection with legal services authorized pursuant to Sec. 578.506(a) 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. Additionally, U.S. persons do not need to obtain specific authorization to provide related services that are ordinarily incident to the provision of legal services authorized pursuant to Sec. 578.506(a). [[Page 81758]] Sec. 578.508 Authorization of emergency medical services. The provision of nonscheduled emergency medical services in the United States to persons whose property and interests in property are blocked pursuant to Sec. 578.201 or any further Executive orders relating to the national emergency declared in Executive Order 13694 of April 1, 2015 and all receipt of payment for such services are authorized. Subparts F-G--[Reserved] Subpart H--Procedures Sec. 578.801 [Reserved] Sec. 578.802 Delegation by the Secretary of the Treasury. Any action that the Secretary of the Treasury is authorized to take pursuant to Executive Order 13694 of April 1, 2015, and any further Executive orders relating to the national emergency declared therein, may be taken by the Director of OFAC or by any other person to whom the Secretary of the Treasury has delegated authority so to act. Subpart I--Paperwork Reduction Act Sec. 578.901 Paperwork Reduction Act notice. For approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information collections relating to recordkeeping and reporting requirements, licensing procedures (including those pursuant to statements of licensing policy), and other procedures, see Sec. 501.901 of this chapter. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. Appendix A to Part 578--Executive Order 13694 Executive Order 13694 of April 1, 2015 Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA), the National Emergencies Act (50 U.S.C. 1601 et seq.) (NEA), section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. 1182(f)), and section 301 of title 3, United States Code, I, BARACK OBAMA, President of the United States of America, find that the increasing prevalence and severity of malicious cyber- enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the United States constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. I hereby declare a national emergency to deal with this threat. Accordingly, I hereby order: Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: (i) any person determined by the Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State, to be responsible for or complicit in, or to have engaged in, directly or indirectly, cyber-enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the United States that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States and that have the purpose or effect of: (A) harming, or otherwise significantly compromising the provision of services by, a computer or network of computers that support one or more entities in a critical infrastructure sector; (B) significantly compromising the provision of services by one or more entities in a critical infrastructure sector; (C) causing a significant disruption to the availability of a computer or network of computers; or (D) causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain; or (ii) any person determined by the Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State: (A) to be responsible for or complicit in, or to have engaged in, the receipt or use for commercial or competitive advantage or private financial gain, or by a commercial entity, outside the United States of trade secrets misappropriated through cyber-enabled means, knowing they have been misappropriated, where the misappropriation of such trade secrets is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States; (B) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, any activity described in subsections (a)(i) or (a)(ii)(A) of this section or any person whose property and interests in property are blocked pursuant to this order; (C) 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 this order; or (D) to have attempted to engage in any of the activities described in subsections (a)(i) and (a)(ii)(A)-(C) of this section. (b) The prohibitions in subsection (a) of this section apply except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the effective date of this order. Sec. 2. I hereby determine that the making of donations of the type of articles specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)) by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of this order would seriously impair my ability to deal with the national emergency declared in this order, and I hereby prohibit such donations as provided by section 1 of this order. Sec. 3. The prohibitions in section 1 of this order include but are not limited to: (a) 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 this order; and (b) the receipt of any contribution or provision of funds, goods, or services from any such person. Sec. 4. I hereby find that the unrestricted immigrant and nonimmigrant entry into the United States of aliens determined to meet one or more of the criteria in section 1(a) of this order would be detrimental to the interests of the United States, and I hereby suspend entry into the United States, as immigrants or nonimmigrants, of such persons. Such persons shall be treated as persons covered by section 1 of Proclamation 8693 of July 24, 2011 (Suspension of Entry of Aliens Subject to United Nations Security Council Travel Bans and International Emergency Economic Powers Act Sanctions). Sec. 5. (a) Any transaction 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 order is prohibited. (b) Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited. Sec. 6. For the purposes of this order: (a) the term ``person'' means an individual or entity; (b) the term ``entity'' means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization; (c) the term ``United States 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; (d) the term ``critical infrastructure sector'' means any of the designated critical infrastructure sectors identified in Presidential Policy Directive 21; and (e) the term ``misappropriation'' includes any taking or obtaining by improper means, without permission or consent, or under false pretenses. Sec. 7. For those persons whose property and interests in property are blocked pursuant to this order who might have a constitutional presence in the United States, I find that because of the ability to transfer [[Page 81759]] funds or other assets instantaneously, prior notice to such persons of measures to be taken pursuant to this order would render those measures ineffectual. I therefore determine that for these measures to be effective in addressing the national emergency declared in this order, there need be no prior notice of a listing or determination made pursuant to section 1 of this order. Sec. 8. The Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State, is hereby authorized to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of this order. The Secretary of the Treasury may redelegate any of these functions to other officers and agencies of the United States Government consistent with applicable law. All agencies of the United States Government are hereby directed to take all appropriate measures within their authority to carry out the provisions of this order. Sec. 9. The Secretary of the Treasury, in consultation with the Attorney General and the Secretary of State, is hereby authorized to submit the recurring and final reports to the Congress on the national emergency declared in this order, consistent with section 401(c) of the NEA (50 U.S.C. 1641(c)) and section 204(c) of IEEPA (50 U.S.C. 1703(c)). Sec. 10. This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Barack Obama THE WHITE HOUSE, April 1, 2015 Dated: December 11, 2015. John E. Smith, Acting Director, Office of Foreign Assets Control. Approved: Dated: December 16, 2015. Adam J. Szubin, Acting Under Secretary, Office of Terrorism and Financial Intelligence, Department of the Treasury. [FR Doc. 2015-32881 Filed 12-30-15; 8:45 am] BILLING CODE P
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective: December 31, 2015. | |
| Contact | The Department of the Treasury's Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.: 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410. | |
| FR Citation | 80 FR 81752 | |
| CFR Associated | Administrative Practice and Procedure; Banking; Banks; Blocking of Assets; Brokers; Credit; Critical Infrastructure; Cyber; Cybersecurity; Foreign Trade; Investments; Loans; Securities; Services and Trade Secrets |