81 FR 22185 - Hizballah Financial Sanctions Regulations
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control Federal Register Volume 81, Issue 73 (April 15, 2016)
Office of Foreign Assets Control
Federal Register Volume 81, Issue 73 (April 15, 2016)
| Page Range | 22185-22192 | |
| FR Document | 2016-08720 |
[Federal Register Volume 81, Number 73 (Friday, April 15, 2016)] [Rules and Regulations] [Pages 22185-22192] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-08720] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Part 566 Hizballah Financial 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 adding new part 566 to 31 CFR chapter V to implement the Hizballah International Financing Prevention Act of 2015, which requires the President to prescribe certain regulations. DATES: Effective: April 15, 2016. 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 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 December 18, 2015, the President signed the Hizballah International Financing Prevention Act of 2015, Public Law 114-102 (HIFPA), into law. Section 102(a)(1) of HIFPA requires the President, within 120 days of the enactment of HIFPA, to prescribe regulations to prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines, on or after December 18, 2015, engages in one or more of the following activities: (1) Knowingly facilitating a significant transaction or transactions for Hizballah; (2) knowingly facilitating a significant transaction or transactions of a person identified on the List of Specially Designated Nationals and Blocked Persons (SDN List) maintained by OFAC, the property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) for acting on behalf of or at the direction of, or being owned or controlled by, Hizballah; (3) knowingly engaging in money laundering to carry out an activity described in (1) or (2); or (4) knowingly facilitating a significant transaction or transactions or providing significant financial services to carry out an activity described in (1), (2), or (3). Pursuant to Presidential Memorandum of March 18, 2016: Delegation of Functions Under Sections 102(a), 102(c), 204, and 302 of HIFPA, the President delegated certain functions and authorities, with respect to the determinations provided for therein, to the Secretary of the Treasury, in consultation with the Secretary of State. In furtherance of HIFPA's requirement and the Presidential delegation of functions and authorities noted above, OFAC is promulgating the Hizballah Financial Sanctions Regulations, 31 CFR part 566 (the ``Regulations''). Subpart A of the Regulations clarifies the relation of this part to other laws and regulations. Subpart B of the Regulations implements section 102(a) of HIFPA. The names of foreign financial institutions that are determined by the Secretary of the Treasury, in consultation with the Secretary of State, to engage in the activities described in Sec. 566.201(a) of the Regulations, and which are subject to prohibitions or strict conditions on the opening or maintaining of correspondent or payable-through accounts as set forth in Sec. 566.201(b) of the Regulations, will be listed on the Hizballah Financial Sanctions Regulations List (HFSR List) on OFAC's Web site (www.treasury.gov/ofac) on the Counter Terrorism Sanctions page and published in the Federal Register. Subpart C of the Regulations defines key terms used throughout the Regulations, and subpart D contains interpretive sections regarding the Regulations. Section 566.404 of subpart D of the Regulations sets forth the types of factors that, as a general matter, the Secretary of the Treasury will consider in determining, for purposes of paragraph (a) of Sec. 566.201, whether transactions or financial services are significant. Transactions otherwise prohibited under the Regulations but found to be consistent with U.S. policy may be authorized by the general licenses contained in subpart E of the Regulations or by a specific license issued pursuant to the procedures described in subpart E of 31 CFR part 501. Subpart E of the Regulations includes a general license in Sec. 566.504 authorizing transactions related to winding down and closing a correspondent account or a payable-through account. Section 566.504 authorizes transactions related to closing a correspondent account or payable-through account for a foreign financial institution whose name is added to the HFSR List during the 10-day period beginning on the effective date of the prohibition in Sec. 566.201. This general license includes a reporting requirement pursuant to which a U.S. financial institution that maintained a correspondent account or a payable-through account for a foreign financial institution whose name is added to the HFSR List must file a report with OFAC that provides full details on the closing of each such account within 30 days of the closure of the account. The report must include complete information on all transactions processed or executed in winding down and closing the account. Subpart F of the Regulations refers to subpart C of part 501 for recordkeeping [[Page 22186]] and reporting requirements. Subpart G of the Regulations describes the civil and criminal penalties applicable to violations of the Regulations, as well as the procedures governing the potential imposition of a civil monetary penalty. Subpart G also refers to Appendix A of part 501 for a more complete description of these procedures. Subpart H of the Regulations refers to subpart E of part 501 for applicable provisions relating to administrative procedures and contains a delegation of authority by the Secretary of the Treasury. Subpart I of the Regulations sets forth a Paperwork Reduction Act notice. 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 With respect to section 2 of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507, the collection of information in Sec. 566.601 of the Regulations is made pursuant to OFAC's Reporting, Procedures and Penalties Regulations, 31 CFR part 501, and has been approved by OMB under control number 1505-0164. See 31 CFR 501.901. The collection of information in Sec. 566.504(b) of the Regulations has been submitted to OMB under Information Collection Request (ICR) number 201603-1505- 002 and is pending approval. Section 566.504(b) specifies that a U.S. financial institution that maintained a correspondent account or payable-through account for a foreign financial institution listed on the HFSR List must file a report with OFAC that provides full details on the closing of each such account within 30 days of the closure of the account. This collection of information assists in verifying that U.S. financial institutions are complying with prohibitions on maintaining correspondent accounts or payable-through accounts for foreign financial institutions listed on the HFSR List, and the information collected will be used to further OFAC's compliance and enforcement functions. With respect to all of the foregoing collections of information, 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. The likely respondents and recordkeepers affected by the new collection of information in Sec. 566.504(b) are U.S. financial institutions operating correspondent accounts or payable-through accounts for foreign financial institutions. Because this is a new collection of information, OFAC cannot predict the response rate for the Sec. 566.504(b) reporting requirement at this time. For future submissions, OFAC will report retrospectively on the response rate during the previous reporting period. The estimated average reporting/recordkeeping burden is 2 hours per response. Comments are invited on: (a) Whether this collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques and other forms of information technology; and (e) the estimated capital or start-up costs of the operation, maintenance, and/or purchase of services to provide information. Comments concerning the above information and the accuracy of these burden estimates, and suggestions for reducing this burden, should be directed to OMB, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with a copy to Chief of Records, Attention: Request for Comments, Office of Foreign Assets Control, Department of the Treasury, 1500 Pennsylvania Avenue NW., Freedman's Bank Building, Washington, DC 20220. Any such comments should be submitted not later than June 14, 2016. All comments on the collection of information in Sec. 566.504(b) will be a matter of public record. List of Subjects in 31 CFR Part 566 Administrative practice and procedure, Banking, Banks, Brokers, Foreign trade, Hizballah, Investments, Loans, Money laundering, Securities, Services. For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control adds part 566 to 31 CFR chapter V to read as follows: PART 566--HIZBALLAH FINANCIAL SANCTIONS REGULATIONS Subpart A--Relation of This Part to Other Laws and Regulations Sec. 566.101 Relation of this part to other laws and regulations. Subpart B--Prohibitions 566.201 Prohibitions or strict conditions with respect to correspondent or payable-through accounts of certain foreign financial institutions identified by the Secretary of the Treasury. 566.202 Evasions; attempts; causing violations; conspiracies. Subpart C--General Definitions 566.300 Applicability of definitions. 566.301 Agent. 566.302 Correspondent account. 566.303 Covered financial institution. 566.304 Effective date. 566.305 Entity. 566.306 Financial institution. 566.307 Financial services. 566.308 Financial transaction. 566.309 Foreign financial institution. 566.310 HIFPA. 566.311 Hizballah. 566.312 Knowingly. 566.313 Licenses; general and specific. 566.314 Money laundering. 566.315 OFAC. 566.316 Payable-through account. 566.317 Person. 566.318 Transaction account. 566.319 United States. 566.320 U.S. financial institution. Subpart D--Interpretations 566.401 Reference to amended sections. 566.402 Effect of amendment. 566.403 Facilitation of certain efforts, activities, or transactions by foreign financial institutions. 566.404 Significant transaction or transactions; significant financial services. Subpart E--Licenses, Authorizations, and Statements of Licensing Policy 566.501 General and specific licensing procedures. 566.502 Effect of license or authorization. 566.503 Exclusion from licenses. 566.504 Transactions related to closing a correspondent or payable- through account. Subpart F--Reports 566.601 Records and reports. Subpart G--Penalties 566.701 Penalties. 566.702 Pre-Penalty Notice; settlement. 566.703 Penalty imposition. 566.704 Administrative collection; referral to United States Department of Justice. Subpart H--Procedures 566.801 Procedures. 566.802 Delegation by the Secretary of the Treasury. [[Page 22187]] Subpart I--Paperwork Reduction Act 566.901 Paperwork Reduction Act notice. Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; 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); Pub. L. 114- 102. Subpart A--Relation of This Part to Other Laws and Regulations Sec. 566.101 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 Sec. 566.201 Prohibitions or strict conditions with respect to correspondent or payable-through accounts of certain foreign financial institutions identified by the Secretary of the Treasury. Upon a determination by the Secretary of the Treasury that a foreign financial institution knowingly engages in one or more of the activities described in paragraphs (a)(1) through (a)(4) of this section, the Secretary of the Treasury may, as set forth in paragraph (b) of this section, impose one or more strict conditions on the opening or maintaining of a correspondent account or a payable-through account in the United States for that foreign financial institution, or, as set forth in paragraph (c) of this section, prohibit a U.S. financial institution from opening or maintaining a correspondent account or a payable-through account in the United States for that foreign financial institution. (a) A foreign financial institution engages in an activity described in this paragraph if, in any location or currency, the foreign financial institution, on or after December 18, 2015, knowingly: (1) Facilitates a significant transaction or transactions for Hizballah; (2) Facilitates a significant transaction or transactions of a person identified on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List), the property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA) for acting on behalf of or at the direction of, or being owned or controlled by, Hizballah; Note to paragraph (a)(2): 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. Persons whose property and interests in property are blocked pursuant to IEEPA for acting on behalf of or at the direction of or being owned or controlled by Hizballah are identified by a special reference to Hizballah at the end of their entries on the SDN List, in addition to the reference to the regulatory part of this chapter pursuant to which their property and interests in property are blocked. For example, a person whose property and interests in property are blocked pursuant to the Global Terrorism Sanctions Regulations, 31 CFR part 594, and identified on the SDN List, will have the program tag ``[SDGT]'' and descriptive text [``Subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations'']. (3) Engages in money laundering to carry out an activity described in paragraphs (a)(1) or (a)(2) of this section; or (4) Facilitates a significant transaction or transactions or provides significant financial services to carry out an activity described in paragraphs (a)(1), (a)(2), or (a)(3) of this section. (b) The Secretary of the Treasury may impose one or more strict conditions on the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for a foreign financial institution that the Secretary finds engages in one or more of the activities described in paragraph (a) of this section. Except as otherwise authorized pursuant to this part, a U.S. financial institution shall not open or maintain a correspondent account or payable-through account in the United States in a manner that is inconsistent with any strict condition imposed and in effect pursuant to this paragraph. Such conditions may include the following: (1) Prohibiting or restricting any provision of trade finance through the correspondent account or payable-through account of the foreign financial institution; (2) 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; (3) 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; (4) 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 (5) Prohibiting or restricting the processing of foreign exchange transactions through the correspondent account or payable-through account of the foreign financial institution. Note to paragraph (b): The name of the foreign financial institution, together with the actual strict condition(s) to be imposed, will be added to the HFSR List on the Office of Foreign Assets Control's Web site (www.treasury.gov/ofac) on the Counter Terrorism Sanctions page, and published in the Federal Register. (c) If the Secretary of the Treasury does not impose one or more strict conditions, pursuant to paragraph (b) of this section, on the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for a foreign financial institution that the Secretary determines engages in one or more of the activities described in paragraph (a) of this section, the Secretary may 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 that foreign financial institution. Except as otherwise authorized pursuant to this part, a U.S. financial institution shall not 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 paragraph. Note to paragraph (c): 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 will be listed on the HFSR List on OFAC's Web site (www.treasury.gov/ofac) on the Counter Terrorism Sanctions page, and published in the Federal Register. [[Page 22188]] Sec. 566.202 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 any of the prohibitions set forth in this part is prohibited. Subpart C--General Definitions Sec. 566.300 Applicability of definitions. The definitions in this subpart apply throughout the entire part. Sec. 566.301 Agent. The term agent includes an entity established by a person for purposes of conducting transactions on behalf of the person in order to conceal the identity of the person. Sec. 566.302 Correspondent account. The term correspondent account means an account established to receive deposits from, make payments on behalf of, or handle other financial transactions related to a foreign financial institution. Sec. 566.303 Covered financial institution. The term covered financial institution means a broker or dealer in securities registered, or required to be registered, with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons who register pursuant to section 15(b)(11) of the Securities Exchange Act of 1934; a futures commission merchant or an introducing broker registered, or required to be registered, with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.), except persons who register pursuant to section 4(f)(a)(2) of the Commodity Exchange Act; or a mutual fund. Sec. 566.304 Effective date. The effective date refers to the effective date of a prohibition or strict condition imposed pursuant to Sec. 566.201 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 and is the earlier of the date the U.S. financial institution receives actual or constructive notice of such prohibition or condition. Sec. 566.305 Entity. The term entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization. Sec. 566.306 Financial institution. The term financial institution means: (a) An insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h)); (b) A commercial bank or trust company; (c) A private banker; (d) An agency or branch of a foreign bank in the United States; (e) Any credit union; (f) A thrift institution; (g) 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.); (h) A broker or dealer in securities or commodities; (i) An investment banker or investment company; (j) A currency exchange; (k) An issuer, redeemer, or cashier of travelers' checks, checks, money orders, or similar instruments; (l) An insurance company; (m) A dealer in precious metals, stones, or jewels; (n) A loan or finance company; (o) A licensed sender of money or any other person who engages as a business in the transmission of funds including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system; (p) A business engaged in vehicle sales, including automobile, airplane, and boat sales; (q) Any business or agency which engages in any activity which the Secretary of the Treasury determines, by regulation, to be an activity which is similar to, related to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or (r) Any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters. Sec. 566.307 Financial services. The term financial services includes loans, transfers, accounts, insurance, investments, securities, guarantees, foreign exchange, letters of credit, and commodity futures or options. Sec. 566.308 Financial transaction. The term financial transaction means any transfer of value involving a financial institution. Sec. 566.309 Foreign financial institution. (a) The term foreign financial institution means: (1) A foreign bank; (2) Any branch or office located outside the United States of a covered financial institution, as defined in Sec. 566.304; (3) Any other person organized under foreign law (other than a branch or office of such person in the United States) that, if it were located in the United States, would be a covered financial institution, as defined in Sec. 566.304; and (4) Any person organized under foreign law (other than a branch or office of such person in the United States) that is engaged in the business of, and is readily identifiable as, a dealer in foreign exchange or a money transmitter. (b) For purposes of paragraph (a)(4) of this section, a person is not ``engaged in the business'' of a dealer in foreign exchange or a money transmitter if such transactions are merely incidental to the person's business. Sec. 566.310 HIFPA. The term HIFPA means the Hizballah International Financing Prevention Act of 2015, Public Law 114-102. Sec. 566.311 Hizballah. The term Hizballah means: (a) The entity known as Hizballah and designated by the Secretary of State as a foreign terrorist organization pursuant to section 219 of the Immigration and Nationality Act (8 U.S.C. 1189); or (b) Any person: (1) The property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.); and (2) Who is identified on the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by OFAC as an agent, instrumentality, or affiliate of Hizballah. Note to Sec. 566.311: 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. Persons on the SDN List that fall within the definition of Hizballah set forth in this section are identified by a special reference to Hizballah at the end of their entries on the SDN List, in addition to the reference to the regulatory part of this chapter pursuant to which their property and interests in property are blocked. For example, a person whose property and interests in property are blocked pursuant to the Global Terrorism Sanctions Regulations, 31 CFR part 594, and identified on the SDN List will have the program tag ``[SDGT]'' and [[Page 22189]] descriptive text [``Subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations'']. Sec. 566.312 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. Sec. 566.313 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. 566.313: See Sec. 501.801 of this chapter on licensing procedures. Sec. 566.314 Money laundering. The term money laundering includes the movement of illicit cash or cash equivalent proceeds into, out of, or through a country, or into, out of, or through a financial institution. Sec. 566.315 OFAC. The term OFAC means the Department of the Treasury's Office of Foreign Assets Control. Sec. 566.316 Payable-through account. The term payable-through account means an account, including a transaction account as defined in Sec. 566.317, opened at a depository institution by 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. Sec. 566.317 Person. The term person means an individual or entity. Sec. 566.318 Transaction account. The term transaction account means a deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. Such term includes demand deposits, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts. Sec. 566.319 United States. The term United States means the United States, its territories and possessions, and all areas under the jurisdiction or authority thereof. Sec. 566.320 U.S. financial institution. The term U.S. financial institution means a financial institution located in or organized under the laws of the United States or any jurisdiction within the United States. Subpart D--Interpretations Sec. 566.401 Reference to amended sections. Except as otherwise provided in this part, reference to any provision in or appendix to this part or chapter or to any regulation, ruling, order, instruction, directive, or license issued pursuant to this part refers to the same as currently amended. Sec. 566.402 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 regulations, ruling, order, 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 regulation, ruling, order, instruction, or license continue and may be enforced as if such amendment, modification, or revocation had not been made. Sec. 566.403 Facilitation of certain efforts, activities, or transactions by foreign financial institutions. For purposes of Sec. 566.201, the term facilitate used with respect to certain efforts, activities, or transactions refers to the provision of assistance by a foreign financial institution for those efforts, activities, or transactions, including the provision of currency, financial instruments, securities, or any other transmission of value; purchasing; selling; transporting; swapping; brokering; financing; approving; guaranteeing; the provision of other services of any kind; the provision of personnel; or the provision of software, technology, or goods of any kind. Sec. 566.404 Significant transactions; significant financial services. In determining, for purposes of paragraph (a) of Sec. 566.201, whether a transaction(s) or financial service(s) is significant, the Secretary of the Treasury may consider the totality of the facts and circumstances. As a general matter, the Secretary may consider some or all of the following factors: (a) Size, number, and frequency. The size, number, and frequency of transaction(s) or financial service(s) performed over a period of time, including whether the transaction(s) or financial service(s) is increasing or decreasing over time and the rate of increase or decrease. (b) Nature. The nature of the transaction(s) or financial service(s), including the type, complexity, and commercial purpose of the transaction(s) or financial service(s). (c) Level of awareness; pattern of conduct. (1) Whether the transaction(s) or financial service(s) is performed with the involvement or approval of management or only by clerical personnel; and (2) Whether the transaction(s) or financial service(s) is 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 transaction(s) or providing the financial service(s) and Hizballah or a blocked person described in paragraph (a)(2) of Sec. 566.201. For example, a transaction or financial service in which a foreign financial institution provides brokerage or clearing services to, or maintains an account or makes payments for, Hizballah or such a blocked person generally would be of greater significance than a transaction or financial service a foreign financial institution conducts for or provides to Hizballah or such a blocked person indirectly or in a tertiary relationship. (e) Impact. The impact of the transaction(s) or financial service(s) on the objectives of the Hizballah International Financing Prevention Act of 2015, including: (1) The economic or other benefit conferred or attempted to be conferred on Hizballah or a blocked person described in paragraph (a)(2) of Sec. 566.201; and (2) Whether and how the transaction(s) or financial service(s) contributes to support for international terrorism. (f) Deceptive practices. Whether the transaction(s) or financial service(s) involves an attempt to obscure or conceal the actual parties or true nature [[Page 22190]] of the transaction(s) or financial service(s) to evade sanctions. (g) Other relevant factors. Such other factors that the Secretary deems relevant on a case-by-case basis in determining the significance of a transaction(s) or financial service(s). Subpart E--Licenses, Authorizations, and Statements of Licensing Policy Sec. 566.501 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 Counter Terrorism Sanctions page on OFAC's Web site: www.treasury.gov/ofac. Sec. 566.502 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 or financial service 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 or financial service 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 or financial services 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 or financial service 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. Sec. 566.503 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. 566.504 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 Sec. 566.201(c) on the opening or maintaining of a correspondent account or a payable-through account for a foreign financial institution listed in the HFSR 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 HFSR List, maintained on OFAC's Web site (www.treasury.gov/ofac) on the Hizballah Sanctions page. 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. Reports should be addressed to the attention of the Sanctions, Compliance & Evaluation Division, 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) 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 HFSR List. License applications should be filed in conformance with Sec. 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 HFSR List. Note to Sec. 566.504: 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 HFSR List, maintained on OFAC's Web site (www.treasury.gov/ofac) on the Counter Terrorism Sanctions page. See Sec. 566.101. Subpart F--Reports Sec. 566.601 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 Sec. 566.701 Penalties. (a) Civil penalties. As set forth in section 102(a)(3) of the Hizballah International Financing Prevention Act of 2015 (Pub. L. 114- 102, 129 Stat. 2205 (50 U.S.C. 1701 note)), a civil penalty not to exceed the amount set forth in section 206(b) of the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1705(b)) 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 set forth in or issued pursuant to this part. Note to paragraph (a): As of the date of publication in the Federal Register of the final rule adding this part to 31 CFR chapter V, April 15, 2016), IEEPA provides for a maximum civil penalty not to exceed the [[Page 22191]] greater of $250,000 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. (b) Criminal penalties. As set forth in section 102(a)(3) of HIFPA, a person who willfully commits, willfully attempts to commit, or willfully conspires to commit a violation of any license, order, regulation, or prohibition set forth in or issued pursuant to this part shall, 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. (c) Adjustments to penalty amounts. (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. (d) Attention is also directed to 18 U.S.C. 1001, which provides that ``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. (e) Violations of this part may also be subject to other applicable laws. Sec. 566.702 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 and determines that a civil monetary penalty or finding of violation is warranted, OFAC will issue a Pre-Penalty Notice informing the alleged violator of the agency's intent to impose a monetary penalty or finding of violation. 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)(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 below. 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 30th day after the postmark date on the envelope in which the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was personally delivered by a non-U.S. Postal Service agent authorized by OFAC, a response must be postmarked or date-stamped on or before the 30th day after the date of delivery. (ii) Extensions of time for response. If a due date falls on a federal holiday or weekend, that due date is extended to include the following business day. Any other extensions of time will be granted, at the discretion of OFAC, only upon specific request to OFAC. (3) Form and method of response. A response to a Pre-Penalty Notice need not be in any particular form, but it must be typewritten and signed by the alleged violator or a representative thereof, must contain information sufficient to indicate that it is in response to the Pre-Penalty Notice, and must include the OFAC identification number listed on the Pre-Penalty Notice. A copy of the written response may be sent by facsimile, but the original also must be sent to OFAC's Enforcement Division by mail or courier and must be postmarked or date- stamped in accordance with paragraph (b)(2) of this section. (c) Settlement. Settlement discussions may be initiated by OFAC, the alleged violator, or the alleged violator's authorized representative. For a description of practices with respect to settlement, see Appendix A to part 501 of this chapter. (d) Guidelines. Guidelines for the imposition or settlement of civil penalties or finding of violations by OFAC are contained in Appendix A to part 501 of this chapter. (e) Representation. A representative may act on behalf of the alleged violator, but any oral communication with OFAC prior to a written submission regarding the specific allegations contained in the Pre-Penalty Notice must be preceded by a written letter of representation, unless the PrePenalty Notice was served upon the alleged violator in care of the representative. Sec. 566.703 Penalty imposition. If, after considering any written response to the Pre-Penalty Notice and any relevant facts, OFAC determines that there was a violation by the alleged violator named in the Pre-Penalty Notice and that a civil monetary penalty or finding of violation is appropriate, OFAC may issue a Penalty Notice or finding of violation to the violator containing a determination of the violation and the imposition of the monetary penalty, if appropriate. For additional details concerning issuance of a Penalty Notice or finding of violation, see Appendix A to part 501 of this chapter. The issuance of the Penalty Notice or finding of violation shall constitute final agency action. The violator has the right to seek judicial review of that final agency action in federal district court. Sec. 566.704 Administrative collection; referral to United States Department of Justice. In the event that the violator does not pay the penalty imposed pursuant to this part or make payment arrangements acceptable to OFAC, the matter may be referred for administrative collection measures by the Department of the Treasury or to the United States Department of Justice for appropriate action to recover the penalty in a civil suit in a federal district court. Subpart H--Procedures Sec. 566.801 Procedures. For license application procedures and procedures relating to amendments, modifications, or revocations of licenses; administrative decisions; rulemaking; and requests for documents pursuant to the Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see part 501, subpart E, of this chapter. Sec. 566.802 Delegation by the Secretary of the Treasury. Any action that the Secretary of the Treasury is authorized to take pursuant to the Hizballah International Financing Prevention Act of 2015 (Pub. L. 114-102, 129 Stat. 2205 (50 U.S.C. 1701 note)) may be taken by the Director of OFAC or by any other person to whom the Secretary of the Treasury has delegated authority to so act. [[Page 22192]] Subpart I--Paperwork Reduction Act Sec. 566.901 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. Dated: April 11, 2016. John E. Smith, Acting Director, Office of Foreign Assets Control. Approved: Dated: April 11, 2016. Adam J. Szubin, Acting Under Secretary, Office of Terrorism and Financial Intelligence, Department of the Treasury. [FR Doc. 2016-08720 Filed 4-14-16; 8:45 am] BILLING CODE P
![Federal Register / Vol. 81, No. 73 / Friday, April 15, 2016 / Rules and Regulations 22185
For plans with a valuation Deferred annuities
Immediate
date (percent)
Rate set annuity rate
(percent)
On or after Before i1 i2 i3 n1 n2
* * * * * * *
271 5–1–16 6–1–16 1.00 4.00 4.00 4.00 7 8
Issued in Washington, DC, on this 11th day Public Law 114–102 (HIFPA), into law. the Regulations, and which are subject
of April 2016. Section 102(a)(1) of HIFPA requires the to prohibitions or strict conditions on
Judith Starr, President, within 120 days of the the opening or maintaining of
General Counsel, Pension Benefit Guaranty enactment of HIFPA, to prescribe correspondent or payable-through
Corporation. regulations to prohibit or impose strict accounts as set forth in § 566.201(b) of
[FR Doc. 2016–08773 Filed 4–14–16; 8:45 am] conditions on the opening or the Regulations, will be listed on the
BILLING CODE 7709–02–P maintaining in the United States of a Hizballah Financial Sanctions
correspondent account or a payable- Regulations List (HFSR List) on OFAC’s
through account by a foreign financial Web site (www.treasury.gov/ofac) on the
DEPARTMENT OF THE TREASURY institution that the President Counter Terrorism Sanctions page and
determines, on or after December 18, published in the Federal Register.
Office of Foreign Assets Control 2015, engages in one or more of the Subpart C of the Regulations defines
following activities: (1) Knowingly key terms used throughout the
31 CFR Part 566 facilitating a significant transaction or Regulations, and subpart D contains
transactions for Hizballah; (2) interpretive sections regarding the
Hizballah Financial Sanctions knowingly facilitating a significant Regulations. Section 566.404 of subpart
Regulations transaction or transactions of a person D of the Regulations sets forth the types
identified on the List of Specially of factors that, as a general matter, the
AGENCY: Office of Foreign Assets
Designated Nationals and Blocked Secretary of the Treasury will consider
Control, Treasury.
Persons (SDN List) maintained by in determining, for purposes of
ACTION: Final rule. paragraph (a) of § 566.201, whether
OFAC, the property and interests in
SUMMARY: The Department of the property of which are blocked pursuant transactions or financial services are
Treasury’s Office of Foreign Assets to the International Emergency significant.
Control (OFAC) is adding new part 566 Economic Powers Act (50 U.S.C. 1701 et Transactions otherwise prohibited
to 31 CFR chapter V to implement the seq.) for acting on behalf of or at the under the Regulations but found to be
Hizballah International Financing direction of, or being owned or consistent with U.S. policy may be
Prevention Act of 2015, which requires controlled by, Hizballah; (3) knowingly authorized by the general licenses
the President to prescribe certain engaging in money laundering to carry contained in subpart E of the
regulations. out an activity described in (1) or (2); or Regulations or by a specific license
(4) knowingly facilitating a significant issued pursuant to the procedures
DATES: Effective: April 15, 2016. transaction or transactions or providing described in subpart E of 31 CFR part
FOR FURTHER INFORMATION CONTACT: The significant financial services to carry out 501. Subpart E of the Regulations
Department of the Treasury’s Office of an activity described in (1), (2), or (3). includes a general license in § 566.504
Foreign Assets Control: Assistant Pursuant to Presidential authorizing transactions related to
Director for Licensing, tel.: 202–622– Memorandum of March 18, 2016: winding down and closing a
2480, Assistant Director for Regulatory Delegation of Functions Under Sections correspondent account or a payable-
Affairs, tel.: 202–622–4855, Assistant 102(a), 102(c), 204, and 302 of HIFPA, through account. Section 566.504
Director for Sanctions Compliance & the President delegated certain authorizes transactions related to
Evaluation, tel.: 202–622–2490; or the functions and authorities, with respect closing a correspondent account or
Department of the Treasury’s Office of to the determinations provided for payable-through account for a foreign
the Chief Counsel (Foreign Assets therein, to the Secretary of the Treasury, financial institution whose name is
Control), Office of the General Counsel, in consultation with the Secretary of added to the HFSR List during the 10-
tel.: 202–622–2410. State. In furtherance of HIFPA’s day period beginning on the effective
SUPPLEMENTARY INFORMATION: requirement and the Presidential date of the prohibition in § 566.201.
delegation of functions and authorities This general license includes a reporting
Electronic and Facsimile Availability noted above, OFAC is promulgating the requirement pursuant to which a U.S.
This document and additional Hizballah Financial Sanctions financial institution that maintained a
information concerning OFAC are Regulations, 31 CFR part 566 (the correspondent account or a payable-
available from OFAC’s Web site ‘‘Regulations’’). through account for a foreign financial
(www.treasury.gov/ofac). Certain general Subpart A of the Regulations clarifies institution whose name is added to the
information pertaining to OFAC’s the relation of this part to other laws HFSR List must file a report with OFAC
sanctions programs also is available via and regulations. Subpart B of the that provides full details on the closing
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facsimile through a 24-hour fax-on- Regulations implements section 102(a) of each such account within 30 days of
demand service, tel.: 202–622–0077. of HIFPA. The names of foreign the closure of the account. The report
financial institutions that are must include complete information on
Background determined by the Secretary of the all transactions processed or executed in
On December 18, 2015, the President Treasury, in consultation with the winding down and closing the account.
signed the Hizballah International Secretary of State, to engage in the Subpart F of the Regulations refers to
Financing Prevention Act of 2015, activities described in § 566.201(a) of subpart C of part 501 for recordkeeping
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Subpart I—Paperwork Reduction Act currency, the foreign financial (2) Restricting the transactions that
566.901 Paperwork Reduction Act notice. institution, on or after December 18, may be processed through the
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 2015, knowingly: correspondent account or payable-
50 U.S.C. 1601–1651, 1701–1706; Pub. L. (1) Facilitates a significant transaction through account of the foreign financial
101–410, 104 Stat. 890 (28 U.S.C. 2461 note); or transactions for Hizballah; institution to certain types of
Pub. L. 110–96, 121 Stat. 1011 (50 U.S.C. (2) Facilitates a significant transaction transactions, such as personal
1705 note); Pub. L. 114–102. or transactions of a person identified on remittances;
OFAC’s Specially Designated Nationals
Subpart A—Relation of This Part to and Blocked Persons List (SDN List), the (3) Placing monetary limits on, or
Other Laws and Regulations property and interests in property of limiting the volume of, the transactions
which are blocked pursuant to the that may be processed through the
§ 566.101 Relation of this part to other correspondent account or payable-
laws and regulations. International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.) through account of the foreign financial
This part is separate from, and institution;
(IEEPA) for acting on behalf of or at the
independent of, the other parts of this
direction of, or being owned or (4) Requiring pre-approval from the
chapter, with the exception of part 501
controlled by, Hizballah; U.S. financial institution for all
of this chapter, the recordkeeping and
Note to paragraph (a)(2): The SDN List is transactions processed through the
reporting requirements and license
accessible through the following page on correspondent account or payable-
application and other procedures of
OFAC’s Web site: www.treasury.gov/sdn. through account of the foreign financial
which apply to this part. Actions taken Additional information pertaining to the SDN institution; or
pursuant to part 501 of this chapter with List can be found in appendix A to this
respect to the prohibitions contained in chapter. Persons whose property and (5) Prohibiting or restricting the
this part are considered actions taken interests in property are blocked pursuant to processing of foreign exchange
pursuant to this part. Differing foreign IEEPA for acting on behalf of or at the transactions through the correspondent
policy and national security direction of or being owned or controlled by account or payable-through account of
circumstances may result in differing Hizballah are identified by a special the foreign financial institution.
reference to Hizballah at the end of their
interpretations of similar language Note to paragraph (b): The name of the
entries on the SDN List, in addition to the
among the parts of this chapter. No reference to the regulatory part of this foreign financial institution, together with
license or authorization contained in or chapter pursuant to which their property and the actual strict condition(s) to be imposed,
issued pursuant to those other parts interests in property are blocked. For will be added to the HFSR List on the Office
authorizes any transaction prohibited by example, a person whose property and of Foreign Assets Control’s Web site
this part. No license or authorization interests in property are blocked pursuant to (www.treasury.gov/ofac) on the Counter
contained in or issued pursuant to any the Global Terrorism Sanctions Regulations, Terrorism Sanctions page, and published in
other provision of law or regulation 31 CFR part 594, and identified on the SDN
the Federal Register.
List, will have the program tag ‘‘[SDGT]’’ and
authorizes any transaction prohibited by descriptive text [‘‘Subject to secondary
this part. No license or authorization (c) If the Secretary of the Treasury
sanctions pursuant to the Hizballah Financial
contained in or issued pursuant to this Sanctions Regulations’’]. does not impose one or more strict
part relieves the involved parties from conditions, pursuant to paragraph (b) of
(3) Engages in money laundering to this section, on the opening or
complying with any other applicable
carry out an activity described in maintaining by a U.S. financial
laws or regulations.
paragraphs (a)(1) or (a)(2) of this section; institution of a correspondent account
Subpart B—Prohibitions or or a payable-through account in the
(4) Facilitates a significant transaction United States for a foreign financial
§ 566.201 Prohibitions or strict conditions or transactions or provides significant institution that the Secretary determines
with respect to correspondent or payable- financial services to carry out an activity engages in one or more of the activities
through accounts of certain foreign described in paragraphs (a)(1), (a)(2), or
financial institutions identified by the described in paragraph (a) of this
(a)(3) of this section.
Secretary of the Treasury. section, the Secretary may prohibit the
(b) The Secretary of the Treasury may
Upon a determination by the opening or maintaining by a U.S.
impose one or more strict conditions on
Secretary of the Treasury that a foreign the opening or maintaining by a U.S. financial institution of a correspondent
financial institution knowingly engages financial institution of a correspondent account or a payable-through account in
in one or more of the activities account or a payable-through account in the United States for that foreign
described in paragraphs (a)(1) through the United States for a foreign financial financial institution. Except as
(a)(4) of this section, the Secretary of the institution that the Secretary finds otherwise authorized pursuant to this
Treasury may, as set forth in paragraph engages in one or more of the activities part, a U.S. financial institution shall
(b) of this section, impose one or more described in paragraph (a) of this not open or maintain a correspondent
strict conditions on the opening or section. Except as otherwise authorized account or a payable-through account in
maintaining of a correspondent account pursuant to this part, a U.S. financial the United States for a foreign financial
or a payable-through account in the institution shall not open or maintain a institution for which the opening or
United States for that foreign financial correspondent account or payable- maintaining of such an account is
institution, or, as set forth in paragraph through account in the United States in prohibited pursuant to this paragraph.
(c) of this section, prohibit a U.S. a manner that is inconsistent with any Note to paragraph (c): The names of
financial institution from opening or strict condition imposed and in effect foreign financial institutions for which the
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maintaining a correspondent account or pursuant to this paragraph. Such opening or maintaining of a correspondent
a payable-through account in the United conditions may include the following: account or a payable-through account in the
States for that foreign financial (1) Prohibiting or restricting any United States is prohibited will be listed on
institution. provision of trade finance through the the HFSR List on OFAC’s Web site
(a) A foreign financial institution correspondent account or payable- (www.treasury.gov/ofac) on the Counter
engages in an activity described in this through account of the foreign financial Terrorism Sanctions page, and published in
paragraph if, in any location or institution; the Federal Register.
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§ 566.202 Evasions; attempts; causing corporation, group, subgroup, or other § 566.309 Foreign financial institution.
violations; conspiracies. organization. (a) The term foreign financial
(a) Any transaction on or after the institution means:
§ 566.306 Financial institution.
effective date that evades or avoids, has (1) A foreign bank;
the purpose of evading or avoiding, The term financial institution means: (2) Any branch or office located
causes a violation of, or attempts to (a) An insured bank (as defined in outside the United States of a covered
violate any of the prohibitions set forth section 3(h) of the Federal Deposit financial institution, as defined in
in this part is prohibited. Insurance Act (12 U.S.C. 1813(h)); § 566.304;
(b) Any conspiracy formed to violate (b) A commercial bank or trust (3) Any other person organized under
any of the prohibitions set forth in this company; foreign law (other than a branch or
part is prohibited. (c) A private banker; office of such person in the United
(d) An agency or branch of a foreign States) that, if it were located in the
Subpart C—General Definitions bank in the United States; United States, would be a covered
(e) Any credit union; financial institution, as defined in
§ 566.300 Applicability of definitions. (f) A thrift institution; § 566.304; and
The definitions in this subpart apply (g) A broker or dealer registered with (4) Any person organized under
throughout the entire part. the Securities and Exchange foreign law (other than a branch or
Commission under the Securities office of such person in the United
§ 566.301 Agent. Exchange Act of 1934 (15 U.S.C. 78a et States) that is engaged in the business
The term agent includes an entity seq.); of, and is readily identifiable as, a dealer
established by a person for purposes of (h) A broker or dealer in securities or in foreign exchange or a money
conducting transactions on behalf of the commodities; transmitter.
person in order to conceal the identity (i) An investment banker or (b) For purposes of paragraph (a)(4) of
of the person. investment company; this section, a person is not ‘‘engaged in
(j) A currency exchange; the business’’ of a dealer in foreign
§ 566.302 Correspondent account. (k) An issuer, redeemer, or cashier of exchange or a money transmitter if such
The term correspondent account travelers’ checks, checks, money orders, transactions are merely incidental to the
means an account established to receive or similar instruments; person’s business.
deposits from, make payments on behalf (l) An insurance company;
of, or handle other financial transactions (m) A dealer in precious metals, § 566.310 HIFPA.
related to a foreign financial institution. stones, or jewels; The term HIFPA means the Hizballah
(n) A loan or finance company; International Financing Prevention Act
§ 566.303 Covered financial institution.
(o) A licensed sender of money or any of 2015, Public Law 114–102.
The term covered financial institution other person who engages as a business
means a broker or dealer in securities in the transmission of funds including § 566.311 Hizballah.
registered, or required to be registered, any person who engages as a business The term Hizballah means:
with the Securities and Exchange in an informal money transfer system or (a) The entity known as Hizballah and
Commission under the Securities any network of people who engage as a designated by the Secretary of State as
Exchange Act of 1934 (15 U.S.C. 78a et business in facilitating the transfer of a foreign terrorist organization pursuant
seq.), except persons who register money domestically or internationally to section 219 of the Immigration and
pursuant to section 15(b)(11) of the outside of the conventional financial Nationality Act (8 U.S.C. 1189); or
Securities Exchange Act of 1934; a institutions system; (b) Any person:
futures commission merchant or an (p) A business engaged in vehicle (1) The property and interests in
introducing broker registered, or sales, including automobile, airplane, property of which are blocked pursuant
required to be registered, with the and boat sales; to the International Emergency
Commodity Futures Trading (q) Any business or agency which Economic Powers Act (50 U.S.C. 1701 et
Commission under the Commodity engages in any activity which the seq.); and
Exchange Act (7 U.S.C. 1 et seq.), except Secretary of the Treasury determines, by (2) Who is identified on the Specially
persons who register pursuant to section regulation, to be an activity which is Designated Nationals and Blocked
4(f)(a)(2) of the Commodity Exchange similar to, related to, or a substitute for Persons List (SDN List) maintained by
Act; or a mutual fund. any activity in which any business OFAC as an agent, instrumentality, or
described in this paragraph is affiliate of Hizballah.
§ 566.304 Effective date.
authorized to engage; or Note to § 566.311: The SDN List is
The effective date refers to the (r) Any other business designated by accessible through the following page on
effective date of a prohibition or strict the Secretary whose cash transactions OFAC’s Web site: www.treasury.gov/sdn.
condition imposed pursuant to have a high degree of usefulness in Additional information pertaining to the SDN
§ 566.201 on the opening or maintaining criminal, tax, or regulatory matters. List can be found in Appendix A to this
of a correspondent account or a payable- chapter. Persons on the SDN List that fall
through account in the United States by § 566.307 Financial services. within the definition of Hizballah set forth in
a U.S. financial institution for a The term financial services includes this section are identified by a special
particular foreign financial institution loans, transfers, accounts, insurance, reference to Hizballah at the end of their
and is the earlier of the date the U.S. investments, securities, guarantees, entries on the SDN List, in addition to the
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reference to the regulatory part of this
financial institution receives actual or foreign exchange, letters of credit, and chapter pursuant to which their property and
constructive notice of such prohibition commodity futures or options. interests in property are blocked. For
or condition. example, a person whose property and
§ 566.308 Financial transaction.
interests in property are blocked pursuant to
§ 566.305 Entity. The term financial transaction means the Global Terrorism Sanctions Regulations,
The term entity means a partnership, any transfer of value involving a 31 CFR part 594, and identified on the SDN
association, trust, joint venture, financial institution. List will have the program tag ‘‘[SDGT]’’ and
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descriptive text [‘‘Subject to secondary making payments or transfers to third § 566.404 Significant transactions;
sanctions pursuant to the Hizballah Financial persons or others. Such term includes significant financial services.
Sanctions Regulations’’]. demand deposits, negotiable order of In determining, for purposes of
withdrawal accounts, savings deposits paragraph (a) of § 566.201, whether a
§ 566.312 Knowingly. subject to automatic transfers, and share transaction(s) or financial service(s) is
The term knowingly, with respect to draft accounts. significant, the Secretary of the Treasury
conduct, a circumstance, or a result, may consider the totality of the facts
means that a person has actual § 566.319 United States. and circumstances. As a general matter,
knowledge, or should have known, of The term United States means the the Secretary may consider some or all
the conduct, the circumstance, or the United States, its territories and of the following factors:
result. possessions, and all areas under the (a) Size, number, and frequency. The
§ 566.313 Licenses; general and specific. jurisdiction or authority thereof. size, number, and frequency of
transaction(s) or financial service(s)
(a) Except as otherwise provided in § 566.320 U.S. financial institution. performed over a period of time,
this part, the term license means any including whether the transaction(s) or
license or authorization contained in or The term U.S. financial institution
financial service(s) is increasing or
issued pursuant to this part. means a financial institution located in
decreasing over time and the rate of
(b) The term general license means or organized under the laws of the
increase or decrease.
any license or authorization the terms of United States or any jurisdiction within
(b) Nature. The nature of the
which are set forth in subpart E of this the United States.
transaction(s) or financial service(s),
part or made available on OFAC’s Web including the type, complexity, and
site: www.treasury.gov/ofac. Subpart D—Interpretations
commercial purpose of the
(c) The term specific license means transaction(s) or financial service(s).
§ 566.401 Reference to amended sections.
any license or authorization issued (c) Level of awareness; pattern of
pursuant to this part but not set forth in Except as otherwise provided in this conduct. (1) Whether the transaction(s)
subpart E of this part or made available part, reference to any provision in or or financial service(s) is performed with
on OFAC’s Web site: www.treasury.gov/ appendix to this part or chapter or to the involvement or approval of
ofac. any regulation, ruling, order, management or only by clerical
Note to § 566.313: See § 501.801 of this instruction, directive, or license issued personnel; and
chapter on licensing procedures. pursuant to this part refers to the same (2) Whether the transaction(s) or
as currently amended. financial service(s) is part of a pattern of
§ 566.314 Money laundering. conduct or the result of a business
§ 566.402 Effect of amendment.
The term money laundering includes development strategy.
the movement of illicit cash or cash Unless otherwise specifically (d) Nexus. The proximity between the
equivalent proceeds into, out of, or provided, any amendment, foreign financial institution engaging in
through a country, or into, out of, or modification, or revocation of any the transaction(s) or providing the
through a financial institution. provision in or appendix to this part or financial service(s) and Hizballah or a
chapter or of any regulations, ruling, blocked person described in paragraph
§ 566.315 OFAC. order, instruction, or license issued by (a)(2) of § 566.201. For example, a
The term OFAC means the OFAC does not affect any act done or transaction or financial service in which
Department of the Treasury’s Office of omitted, or any civil or criminal a foreign financial institution provides
Foreign Assets Control. proceeding commenced or pending, brokerage or clearing services to, or
prior to such amendment, modification, maintains an account or makes
§ 566.316 Payable-through account.
or revocation. All penalties, forfeitures, payments for, Hizballah or such a
The term payable-through account and liabilities under any such blocked person generally would be of
means an account, including a regulation, ruling, order, instruction, or greater significance than a transaction or
transaction account as defined in license continue and may be enforced as financial service a foreign financial
§ 566.317, opened at a depository if such amendment, modification, or institution conducts for or provides to
institution by a foreign financial revocation had not been made. Hizballah or such a blocked person
institution by means of which the
indirectly or in a tertiary relationship.
foreign financial institution permits its § 566.403 Facilitation of certain efforts,
(e) Impact. The impact of the
customers to engage, either directly or activities, or transactions by foreign
transaction(s) or financial service(s) on
through a subaccount, in banking financial institutions.
the objectives of the Hizballah
activities usual in connection with the For purposes of § 566.201, the term International Financing Prevention Act
business of banking in the United
facilitate used with respect to certain of 2015, including:
States.
efforts, activities, or transactions refers (1) The economic or other benefit
§ 566.317 Person. to the provision of assistance by a conferred or attempted to be conferred
The term person means an individual foreign financial institution for those on Hizballah or a blocked person
or entity. efforts, activities, or transactions, described in paragraph (a)(2) of
including the provision of currency, § 566.201; and
§ 566.318 Transaction account. financial instruments, securities, or any (2) Whether and how the
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The term transaction account means other transmission of value; purchasing; transaction(s) or financial service(s)
a deposit or account on which the selling; transporting; swapping; contributes to support for international
depositor or account holder is permitted brokering; financing; approving; terrorism.
to make withdrawals by negotiable or guaranteeing; the provision of other (f) Deceptive practices. Whether the
transferable instrument, payment orders services of any kind; the provision of transaction(s) or financial service(s)
of withdrawal, telephone transfers, or personnel; or the provision of software, involves an attempt to obscure or
other similar items for the purpose of technology, or goods of any kind. conceal the actual parties or true nature
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![22192 Federal Register / Vol. 81, No. 73 / Friday, April 15, 2016 / Rules and Regulations
Subpart I—Paperwork Reduction Act www.regulations.gov, type USCG–2016– than 30 days after publication in the
0208 in the ‘‘SEARCH’’ box and click Federal Register. For the same reasons
§ 566.901 Paperwork Reduction Act notice. ‘‘SEARCH.’’ Click on Open Docket discussed in the preceding paragraph,
For approval by the Office of Folder on the line associated with this waiting for a 30 day notice period to run
Management and Budget (OMB) under rule. would be impracticable.
the Paperwork Reduction Act of 1995 FOR FURTHER INFORMATION CONTACT: If III. Legal Authority and Need for Rule
(44 U.S.C. 3507) of information you have questions on this temporary
collections relating to recordkeeping final rule, call or email Petty Officer The Coast Guard is issuing this rule
and reporting requirements, licensing Todd Manow, Prevention Department, under authority in 33 U.S.C. 1231, 33
procedures (including those pursuant to Sector Detroit, Coast Guard; telephone CFR 1.05–1 and 160.5; and Department
statements of licensing policy), and 313–568–9508, email Todd.M.Manow@ of Homeland Security Delegation No.
other procedures, see § 501.901 of this uscg.mil. 0170.1. The Captain of the Port Detroit
chapter. An agency may not conduct or (COTP) has determined that the likely
SUPPLEMENTARY INFORMATION:
sponsor, and a person is not required to combination of recreation vessels,
respond to, a collection of information I. Table of Abbreviations commercial vessels, and an unknown
unless it displays a valid control COTP Captain of the Port
number of spectators in close proximity
number assigned by OMB. DHS Department of Homeland Security to a youth rowing regatta along the
Dated: April 11, 2016. E.O. Executive Order water pose extra and unusual hazards to
NAD 83 North American Datum of 1983 public safety and property. Therefore,
John E. Smith,
NPRM Notice of Proposed Rulemaking the COTP is establishing a Special Local
Acting Director, Office of Foreign Assets Regulation around the event location to
Control. II. Background History and Regulatory
Information help minimize risks to safety of life and
Approved: property during this event.
Dated: April 11, 2016. On April 30, 2016, the Wyandotte
Adam J. Szubin, Boat Club is holding a rowing regatta in IV. Discussion of Rule
Acting Under Secretary, Office of Terrorism which at least 100 youth rowers will This rule establishes a temporary
and Financial Intelligence, Department of the participate in a race in the Trenton special local regulation from 7:30 a.m.
Treasury. Channel, a tributary of the Detroit River. until 3 p.m. on April 30, 2016. In light
[FR Doc. 2016–08720 Filed 4–14–16; 8:45 am] Due to the projected amount of human- of the aforementioned hazards, the
BILLING CODE P powered watercraft on the water, there COTP has determined that a special
is a need to require vessels in the local regulation is necessary to protect
affected waterways to maintain a spectators, vessels, and participants.
DEPARTMENT OF HOMELAND minimum speed for safe navigation. The The special local regulation will
SECURITY rowing regatta will occur between 7:30 encompass the following waterway: All
a.m. and 3 p.m. on April 30, 2016. This waters of the Detroit River, Trenton
Coast Guard event has taken place under the same Channel between the following two
sponsorship in the same location lines going from bank-to-bank: The first
33 CFR Part 100 annually for the past 51 years. line is drawn directly across the channel
The Coast Guard is issuing this from position 42°11.0′ N., 083°09.4′ W.
[Docket No. USCG–2016–0208] temporary final rule without prior (NAD 83); the second line, to the north,
RIN 1625–AA08 notice and opportunity to comment is drawn directly across the channel
pursuant to authority under section 4(a) from position 42°11.7′ N., 083°8.9′ W.
Special Local Regulation; Hebda Cup of the Administrative Procedure Act (NAD 83).
Rowing Regatta; Detroit River, Trenton (APA) (5 U.S.C. 553(b)). This provision An on-scene representative of the
Channel; Wyandotte, MI authorizes an agency to issue a rule COTP or event sponsor representatives
without prior notice and opportunity to may permit vessels to transit the area
AGENCY: Coast Guard, DHS. comment when the agency, for good when no race activity is occurring. The
ACTION: Temporary final rule. cause, finds that those procedures are on-scene representative may be present
‘‘impracticable, unnecessary, or contrary on any Coast Guard, state or local law
SUMMARY: The Coast Guard is
to the public interest.’’ Under 5 U.S.C. enforcement vessel assigned to patrol
establishing a temporary special local
553(b)(B), the Coast Guard finds that the event. Vessel operators desiring to
regulation controlling movement of
good cause exists for not publishing a transit through the regulated area must
vessels for certain waters of the Detroit
notice of proposed rulemaking (NPRM) contact the Coast Guard Patrol
River, Trenton Channel. This action is
with respect to this rule because doing Commander to obtain permission to do
necessary and is intended to ensure
so would be impracticable. The final so. The COTP or his designated on-
safety of life on navigable waters to be
details of this event were not known to scene representative may be contacted
used for a rowing event immediately
the Coast Guard until there was via VHF Channel 16.
prior to, during, and immediately after
insufficient time remaining before the The COTP or his designated on-scene
this event. This regulation requires
event to publish an NPRM. Thus, representative will notify the public of
vessels to maintain a minimum speed
delaying the effective date of this rule to the enforcement of this rule by all
for safe navigation and maneuvering.
wait for a comment period to run would appropriate means, including a
DATES: This temporary final rule is be impracticable because it would Broadcast Notice to Mariners and Local
jstallworth on DSK7TPTVN1PROD with RULES
effective from 7:30 a.m. until 3 p.m. on inhibit the Coast Guard’s ability to event Notice to Mariners.
April 30, 2016. For the purposes of participants, spectators, and other
enforcement, actual notice will be used waterway users during this youth V. Regulatory Analyses
on April 30, 2016. rowing regatta. We developed this rule after
ADDRESSES: To view documents Under 5 U.S.C. 553(d)(3), the Coast considering numerous statutes and
mentioned in this preamble as being Guard finds that good cause exists for executive orders related to rulemaking.
available in the docket, go to http:// making this temporary rule effective less Below we summarize our analyses
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Document Created: 2016-04-15 00:55:35
Document Modified: 2016-04-15 00:55:35
| 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: April 15, 2016. | |
| 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 | 81 FR 22185 | |
| CFR Associated | Administrative Practice and Procedure; Banking; Banks; Brokers; Foreign Trade; Hizballah; Investments; Loans; Money Laundering; Securities and Services |
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