83 FR 28370 - Rough Diamonds Control Regulations

DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control

Federal Register Volume 83, Issue 118 (June 19, 2018)

The Department of the Treasury's Office of Foreign Assets Control (OFAC) is amending the Rough Diamonds Control Regulations to clarify several reporting requirements and remove another, clarify which entity may issue Kimberley Process Certificates for the export of rough diamonds from the United States, clarify the steps necessary to validate a Kimberley Process Certificate, add two definitions that define rough diamond packaging requirements and Kimberley Process voided certificates, and make certain technical and conforming changes to the penalties section of the regulations.

[Federal Register Volume 83, Number 118 (Tuesday, June 19, 2018)]
[Rules and Regulations]
[Pages 28370-28375]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-12887]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 592


Rough Diamonds Control Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (OFAC) is amending the Rough Diamonds Control Regulations to 
clarify several reporting requirements and remove another, clarify 
which entity may issue Kimberley Process Certificates for the export of 
rough diamonds from the United States, clarify the steps necessary to 
validate a Kimberley Process Certificate, add two definitions that 
define rough diamond packaging requirements and Kimberley Process 
voided certificates, and make certain technical and conforming changes 
to the penalties section of the regulations.

DATES: Effective Date: This rule is effective June 19, 2018.

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 website (www.treas.gov/ofac).

Background

    On August 4, 2003, OFAC promulgated the Rough Diamonds Control 
Regulations, 31 CFR part 592 (the ``Regulations''), to implement 
Executive Order 13312 (E.O. 13312) of July 29, 2003. E.O. 13312 was 
issued to implement the Clean Diamond Trade Act (Pub. L. 108-19) (CDTA) 
and the multilateral Kimberley Process Certification Scheme for rough 
diamonds (KPCS). OFAC amended the Regulations on September 23, 2004 to 
revise certain reporting requirements (69 FR 56936). OFAC further 
amended the Regulations on May 21, 2008 (73 FR 29433) to enhance the 
compilation of statistical data relating to the

[[Page 28371]]

importation and exportation of rough diamonds.
    Today, in consultation with the U.S. Department of Commerce, Bureau 
of the Census (Census Bureau), Department of State, and Department of 
Homeland Security, Customs and Border Protection (CBP), OFAC is again 
amending the Regulations. First, in coordination with a regulatory 
amendment by the Census Bureau (83 FR 17749), OFAC is incorporating 
into the Regulations existing Census Bureau requirements for submission 
of Kimberley Process Certificates in connection with the importation 
and exportation of rough diamonds. In addition, OFAC is clarifying 
which entity may issue Kimberley Process Certificates for the export of 
rough diamonds from the United States and adding two definitions that 
define rough diamond packaging requirements and Kimberley Process 
voided certificates. Additionally, OFAC is making certain technical and 
conforming changes to the penalties section of the Regulations.
    Reporting requirements. First, in coordination with a regulatory 
amendment by the Census Bureau, OFAC is amending Sec.  592.301 to 
incorporate existing Census Bureau requirements for submission of 
Kimberley Process Certificates in connection with the importation and 
exportation of rough diamonds. The Census Bureau is amending the 
Foreign Trade Regulations (FTR), 15 CFR part 30, to clarify that the 
data it collects from Kimberley Process Certificates is collected in 
compliance with the CDTA and not Title 13, United States Code (U.S.C.), 
and to clarify submission requirements for and permissible uses of the 
Kimberley Process Certificates. In paragraph (a)(1)(iii) of Sec.  
592.301, OFAC is incorporating the existing requirement pursuant to the 
FTR that importers or customs brokers provide a copy of the Kimberley 
Process Certificate accompanying a shipment of rough diamonds to the 
Census Bureau immediately after entry of the rough diamonds in the 
United States. In paragraph (a)(1)(iv) of this section, OFAC is 
incorporating the FTR requirement that, with respect to rough diamond 
exports, the U.S. Principal Party in Interest or U.S. authorized agent, 
see 15 CFR 30.1, must provide a copy of the Kimberley Process 
Certificate to the Census Bureau immediately after export from the 
United States. In paragraph (a)(1)(v) of this section, OFAC is 
incorporating the FTR requirement that any voided certificate be 
provided to the Census Bureau immediately upon voiding.
    At the same time, in consultation with the Department of State, the 
Census Bureau, and CBP, OFAC is removing the requirement that all rough 
diamond importers and exporters file annual reports with the Department 
of State detailing their import, export, and stockpile information as 
previously set forth in Sec.  592.502. OFAC has removed this 
requirement as unnecessary in light of alternate sources from which to 
obtain relevant information.
    Additional clarifications. In Sec.  592.301, OFAC is also adding 
new paragraph (a)(4) and amending and redesignating current paragraph 
(a)(4) as (a)(5). New paragraph (a)(4) of this section clarifies the 
criteria that a Kimberley Process Certificate issuer must meet, while 
an accompanying note clarifies that, as reflected in a Memorandum of 
Understanding (MOU) among the Department of State, the Census Bureau, 
and U.S. Kimberley Process Authority (USKPA), a non-profit association, 
Kimberley Process Certificates for the exportation of rough diamonds 
from the United States may only be issued at this time by the USKPA or 
by entities licensed to do so by the USKPA. The new paragraph also 
states that Kimberley Process Certificates may be issued ``on behalf 
of'' this entity. In addition, amended and redesignated paragraph 
(a)(5) of this section clarifies the steps necessary to validate a 
Kimberley Process Certificate prior to exporting rough diamonds from 
the United States.
    Definitions. OFAC is adding two definitions to the Regulations. The 
term Voided certificate, used in Sec.  592.301(a)(1)(v), is defined in 
new Sec.  592.313. Consistent with CBP's practice, OFAC defines the 
term Voided certificate to mean ``a Kimberley Process Certificate 
intended to be used for the exportation of rough diamonds from the 
United States that has been cancelled, for reasons such as loss or 
error.''
    OFAC is also defining the term Tamper-resistant container, used in 
Sec.  592.301(a)(2), by adding new Sec.  592.314. Consistent with CBP 
practice, OFAC defines the term Tamper-resistant container to mean 
``packaging having an indicator or barrier to entry that could 
reasonably be expected to provide visible evidence that tampering had 
occurred.'' A note to the definition further clarifies that standard 
mailing and express consignment packaging, or such packaging that 
simply contains a resealable plastic bag, is not considered to be a 
tamper-resistant container. This definition is intended to foster 
uniformity in CBP's enforcement of rough diamond shipping requirements. 
OFAC is also making a conforming change in paragraph (a)(2) of Sec.  
592.301 by changing ``Tamper-resistant container'' to ``Tamper-
resistance requirement.''
    Penalties. OFAC is also amending Subpart F, which describes the 
penalties applicable to violations of the Regulations, as well as the 
procedures governing the potential imposition of a civil monetary 
penalty or issuance of a Finding of Violation. OFAC is updating the 
language of this subpart and incorporating references to OFAC's 
Economic Sanctions Enforcement Guidelines contained in appendix A to 
part 501 of this chapter.

Public Participation

    Because the amendments to 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, as well as the provisions of Executive Order 13771, 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 (PRA), the collections of information in Sec. Sec.  
592.301(a)(1)(i) and (ii), 592.501, and 592.603 of the Regulations are 
made pursuant to OFAC's Reporting, Procedures, and Penalties 
Regulations (31 CFR part 501) and have been approved by the Office of 
Management and Budget (OMB) under control number 1505-0164. Pursuant to 
the Census Bureau, the collections of information in Sec.  
592.301(a)(1)(iii)-(v) and in Sec.  592.301(a)(5) related to exporter 
and importer reporting requirements and the FTR previously were 
approved by OMB under control number 0607-0152.
    OMB Approval 1505-0198: Report to foreign exporting authority. The 
collection of information in Sec.  592.301(a)(3) has been submitted to 
OMB for review and approval under control number 1505-0198. This 
collection of information assists in carrying out the requirements of 
the CDTA and KPCS and monitoring the integrity of international 
shipments of rough diamonds, including that the United States produce 
statistics on imports and exports of rough diamonds and that these 
statistics be made available for analysis by interested parties, 
including other governments participating in the KPCS. The

[[Page 28372]]

information collected will be used to assist the Census Bureau in 
carrying out its statistics-related functions and the State Department 
in its KPCS oversight functions, and to further the compliance, 
enforcement, and civil penalty programs of OFAC, CBP and U.S. 
Immigration and Customs Enforcement, each of which has enforcement 
authority under the CDTA and various implementing regulations. See 
Sec. Sec.  5(a) and 8 of the CDTA.
    OMB Approval 1505-0198: Annual State report. The collection of 
information previously in Sec.  592.502 and approved by OMB under 
control number 1505-0198 has been removed as unnecessary in light of 
alternate sources from which to obtain relevant information.
    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 subject to the requirements of 
the PRA, unless the collection of information displays a current, valid 
OMB control number.
    The likely respondents and recordkeepers affected by the collection 
of information in Sec.  592.301(a)(3) (report to foreign exporting 
authority) and the removal of the collection of information in Sec.  
592.502 (Annual State report) are rough diamond importers and 
exporters. The anticipated number of respondents is approximately 80. 
OFAC expects that the majority of these respondents will report to 
foreign exporting authorities approximately 15 times per year. Based on 
information from rough diamond traders and CBP's experience, roughly 
1,200 individual transaction reports are expected annually. The total 
number of burden hours associated with the individual transaction 
reports is anticipated to be 200. This is based on an estimated 
completion and submission time of 10 minutes per report. This is a 
decrease of 300 burden hours from the prior hour burden based on 
current estimates that indicate there are fewer respondents and fewer 
imports than previously assumed. Based on information from rough 
diamonds traders, OFAC does not expect the hour burden on respondents 
to vary widely. Additionally, OFAC understands that it is the customary 
and usual business practice for most traders to send a detailed 
acknowledgment of receipt of a shipment to their overseas counterparts 
to the transaction.
    As this regulatory amendment removes the annual State reporting 
requirement, the total number of burden hours is reduced by an 
estimated 1,250 hours. This is based on an estimated completion and 
submission time of five hours per report. The overall reduction in 
burden hours is therefore this reduction of 1,250 burden hours plus the 
reduction of 300 burden hours with respect to the report to foreign 
exporting authorities for a total reduction of 1,550 burden hours. The 
aggregate burden hours now associated with this information collection 
is 200 burden hours.
    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 (OIRA), 
Washington, DC 20503 or by email to: [email protected], 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 July 19, 2018. All comments 
on the collections of information in Sec.  592.301(a)(3) and the 
removal of the collection of information in Sec.  592.502 will be a 
matter of public record.

List of Subjects in 31 CFR Part 592

    Administrative practice and procedure, Foreign trade, Exports, 
Imports, Kimberley Process, Penalties, Reporting and recordkeeping 
requirements, Rough diamond.

    For the reasons set forth in the preamble, the Office of Foreign 
Assets Control amends 31 CFR part 592 as follows:

PART 592--ROUGH DIAMONDS CONTROL REGULATIONS

0
1. The authority citation for part 592 is revised to read as follows:

    Authority:  3 U.S.C. 301; 19 U.S.C. 3901-3913; 28 U.S.C. 2461 
note; 31 U.S.C. 321(b); E.O. 13312, 68 FR 45151, 3 CFR, 2003 Comp., 
p. 246.

Subpart C--General Definitions

0
2. Amend Sec.  592.301 by revising paragraphs (a)(1), (a)(2), and 
(a)(4), and adding paragraph (a)(5) to read as follows:


Sec.  592.301  Controlled through the Kimberley Process Certification 
Scheme.

    (a) * * *
    (1) Kimberley Process Certificate. A shipment of rough diamonds 
imported into, or exported from, the United States must be accompanied 
by an original Kimberley Process Certificate. The certificate must be 
provided as follows:
    (i) The original certificate must be presented immediately upon 
demand to U.S. Customs and Border Protection in connection with an 
importation or exportation of rough diamonds;
    (ii) The person identified as the ultimate consignee (see Customs 
Directive 3550-079A) on the Customs Form 7501 Entry Summary or its 
electronic equivalent filed with U.S. Customs and Border Protection in 
connection with an importation of rough diamonds must retain the 
original Kimberley Process Certificate for a period of at least five 
years from the date of importation (see also 19 CFR 12.152);
    (iii) The person identified as the ultimate consignee (see Customs 
Directive 3550-079A) on the Customs Form 7501 Entry Summary or its 
electronic equivalent filed with U.S. Customs and Border Protection in 
connection with an importation of rough diamonds must provide the 
certificate to the U.S. Bureau of the Census immediately after entry of 
the shipment in the United States. The certificate must be provided by 
faxing it to (800) 457-7328 or by other methods as permitted by the 
U.S. Bureau of the Census;
    (iv) The U.S. Principal Party in Interest or U.S. authorized agent 
(see 15 CFR 30.1) must also provide the certificate to the U.S. Bureau 
of the Census immediately after export of the shipment of rough 
diamonds from the United States by faxing it to (800) 457-7328 or by 
other methods as permitted by the U.S. Bureau of the Census; and
    (v) Any voided certificate(s) must be provided to the U.S. Bureau 
of the Census immediately upon voiding by faxing it to (800) 457-7328 
or by other methods as permitted by the U.S. Bureau of the Census (see 
Sec.  592.313);
    (2) Tamper-resistance requirement. A shipment of rough diamonds 
imported into, or exported from, the United States

[[Page 28373]]

must be sealed in a tamper-resistant container;
* * * * *
    (4) Issuance of Kimberley Process Certificate for exportations from 
the United States. Consistent with section 5(c) of the Clean Diamond 
Trade Act (CDTA), the Kimberley Process Certificate accompanying a 
shipment of rough diamonds exported from the United States must be 
issued by, or on behalf of, an entity whose standards, practices, and 
procedures are annually reviewed by the appropriate U.S. Government 
agency, and that has reached an arrangement with such agency concerning 
the issuance of Kimberley Process Certificates consistent with the 
Kimberley Process Certification Scheme and the CDTA.

    Note to paragraph (a)(4):  As reflected in a Memorandum of 
Understanding (MOU) among the U.S. Department of State, the U.S. 
Bureau of the Census, and the U.S. Kimberley Process Authority 
(USKPA), a non-profit association, Kimberley Process Certificates 
for the exportation of rough diamonds from the United States may 
only be issued at this time by the USKPA or by entities licensed to 
do so by the USKPA. Pursuant to this MOU, the U.S. Department of 
State annually reviews the USKPA's standards, practices, and 
procedures. The Secretary of State may reassign this review function 
to any other officers, officials, departments, and agencies within 
the executive branch, consistent with applicable law.

    (5) Validation of Kimberley Process Certificate for exportations 
from the United States. With respect to the validation of a Kimberley 
Process Certificate for the exportation of rough diamonds from the 
United States, exporters must:
    (i) Report shipments to the U.S. Bureau of the Census through the 
Automated Export System (AES) or a successor system and obtain an 
Internal Transaction Number (ITN) prior to exportation. The ITN is the 
number generated by the AES and assigned to a shipment confirming that 
an Electronic Export Information (EEI) was accepted and is on file in 
the AES.
    (ii) Report the ITN on the Kimberley Process Certificate 
accompanying any exportation from the United States, which completes 
the validation process for the exportation of rough diamonds from the 
United States to a Participant.
* * * * *

0
3. Add Sec.  592.313 to subpart C to read as follows:


Sec.  592.313  Voided certificate.

    The term voided certificate means a Kimberley Process Certificate 
intended to be used for the exportation of rough diamonds from the 
United States that has been cancelled for reasons such as loss or 
error.

0
4. Add Sec.  592.314 to subpart C to read as follows:


Sec.  592.314  Tamper-resistant container.

    The term tamper-resistant container means packaging having an 
indicator or barrier to entry that could reasonably be expected to 
provide visible evidence that tampering had occurred. Standard mailing 
and express consignment packaging, or such packaging that simply 
contains a resealable plastic bag, is not considered to be a tamper-
resistant container.

Subpart E--Records and Reports


Sec.  592.502   [Amended]

0
5. Remove Sec.  592.502.

Subpart F--Penalties

0
6. Amend Sec.  592.601 by:
0
a. Revising paragraph (a)(3);
0
b. Revising the note to paragraph (a); and
0
c. Revising paragraphs (c) and (d).
    The revisions read as follows:


Sec.  592.601  Penalties.

    (a) * * *
    (3) Those customs laws of the United States, both civil and 
criminal, including those laws relating to seizure and forfeiture, that 
apply to articles imported in violation of such laws shall apply with 
respect to any rough diamond imported in violation of the Act.

    Note to paragraph (a):  As reflected in paragraphs (a)(1) and 
(2) of this section, section 8(a) of the Act establishes penalties 
with respect to any violation of any regulation issued under the 
Act. OFAC pre-penalty, penalty, and administrative collection 
procedures relating to such violations are set forth below in 
Sec. Sec.  592.602 through 592.604. Section 8(c) of the Act also 
authorizes the U.S. Bureau of Customs and Border Protection and U.S. 
Immigration and Customs Enforcement, as appropriate, to enforce the 
penalty provisions set forth in paragraph (a) of this section and to 
enforce the laws and regulations governing exports of rough 
diamonds, including with respect to the validation of the Kimberley 
Process Certificate by the U.S. Bureau of the Census. The Office of 
Foreign Assets Control (OFAC) civil penalty procedures set forth 
below are separate from, and independent of, any penalty procedures 
that may be followed by the U.S. Bureau of Customs and Border 
Protection and U.S. Immigration and Customs Enforcement in their 
exercise of the authorities set forth in section 8(c) of the Act.

* * * * *
    (c) Pursuant to 18 U.S.C. 1001, whoever, in any matter within the 
jurisdiction of the executive, legislative, or judicial branch of the 
government of the United States, knowingly and willfully falsifies, 
conceals, or covers up by any trick, scheme, or device, a material 
fact, or makes any materially false, fictitious, or fraudulent 
statement or representation or makes or uses any false writing or 
document knowing the same to contain any materially false, fictitious, 
or fraudulent statement or entry shall be fined under title 18, United 
States Code, imprisoned, or both.
    (d) Violations of this part may also be subject to other applicable 
laws.

0
7. Revise Sec.  592.602 to read as follows:


Sec.  592.602  Pre-Penalty Notice; settlement.

    (a) When required. If OFAC has reason to believe that there has 
occurred a violation of any provision of this part or a violation of 
the provisions of any license, ruling, regulation, order, directive, or 
instruction issued by or pursuant to the direction or authorization of 
the Secretary of the Treasury pursuant to this part or otherwise under 
the Clean Diamond Trade Act, and determines that a civil monetary 
penalty is warranted, OFAC will issue a Pre-Penalty Notice informing 
the alleged violator of the agency's intent to impose a monetary 
penalty. A Pre-Penalty Notice shall be in writing. The Pre-Penalty 
Notice may be issued whether or not another agency has taken any action 
with respect to the matter. For a description of the contents of a Pre-
Penalty Notice, see appendix A to part 501 of this chapter.
    (b) Response--(1) Right to respond. An alleged violator has the 
right to respond to a Pre-Penalty Notice by making a written 
presentation to OFAC. For a description of the information that should 
be included in such a response, see appendix A to part 501 of this 
chapter.
    (2) Deadline for response. A response to a Pre-Penalty Notice must 
be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of 
this section. The failure to submit a response within 30 days shall be 
deemed to be a waiver of the right to respond.
    (i) Computation of time for response. A response to a Pre-Penalty 
Notice must be postmarked or date-stamped by the U.S. Postal Service 
(or foreign postal service, if mailed abroad) or courier service 
provider (if transmitted to OFAC by courier) on or before the 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

[[Page 28374]]

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, contain 
information sufficient to indicate that it is in response to the Pre-
Penalty Notice, and 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 Office of 
Compliance and Enforcement by mail or courier and must be postmarked or 
date-stamped in accordance with paragraph (b)(2) of this section.
    (c) Settlement. Settlement discussion 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 by OFAC are contained in appendix A to part 501 of this 
chapter.
    (e) Representation. A representative of the alleged violator 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 Pre-Penalty Notice was served upon 
the alleged violator in care of the representative.

0
8. Revise Sec.  592.603 to read as follows:


Sec.  592.603  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 is appropriate, OFAC may issue a Penalty 
Notice to the violator containing a determination of the violation and 
the imposition of the monetary penalty. For additional details 
concerning issuance of a Penalty Notice, see appendix A to part 501 of 
this chapter. The issuance of the Penalty Notice shall constitute final 
agency action. The violator has the right to seek judicial review of 
that final agency action in federal district court.

0
9. Revise Sec.  592.604 to read as follows:


Sec.  592.604  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.

0
10. Revise Sec.  592.605 to read as follows:


Sec.  592.605  Finding of Violation.

    (a) When issued. (1) OFAC may issue an initial Finding of Violation 
that identifies a violation if OFAC:
    (i) Determines that there has occurred a violation of any provision 
of this part, or a violation of the provisions of any license, ruling, 
regulation, order, directive, or instruction issued by or pursuant to 
the direction or authorization of the Secretary of the Treasury 
pursuant to this part or otherwise under the Clean Diamond Trade Act;
    (ii) Considers it important to document the occurrence of a 
violation; and,
    (iii) Based on the Guidelines contained in appendix A to part 501 
of this chapter, concludes that an administrative response is warranted 
but that a civil monetary penalty is not the most appropriate response.
    (2) An initial Finding of Violation shall be in writing and may be 
issued whether or not another agency has taken any action with respect 
to the matter. For additional details concerning issuance of a Finding 
of Violation, see appendix A to part 501 of this chapter.
    (b) Response--(1) Right to respond. An alleged violator has the 
right to contest an initial Finding of Violation by providing a written 
response to OFAC.
    (2) Deadline for response; default determination. A response to an 
initial Finding of Violation must be made within 30 days as set forth 
in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit 
a response within 30 days shall be deemed to be a waiver of the right 
to respond, and the initial Finding of Violation will become final and 
will constitute final agency action. The violator has the right to seek 
judicial review of that final agency action in federal district court.
    (i) Computation of time for response. A response to an initial 
Finding of Violation 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 initial 
Finding of Violation was served. If the initial Finding of Violation 
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 an initial Finding 
of Violation need not be in any particular form, but it must be 
typewritten and signed by the alleged violator or a representative 
thereof, contain information sufficient to indicate that it is in 
response to the initial Finding of Violation, and include the OFAC 
identification number listed on the initial Finding of Violation. A 
copy of the written response may be sent by facsimile, but the original 
also must be sent to OFAC by mail or courier and must be postmarked or 
date-stamped in accordance with paragraph (b)(2) of this section.
    (4) Information that should be included in response. Any response 
should set forth in detail why the alleged violator either believes 
that a violation of the regulations did not occur and/or why a Finding 
of Violation is otherwise unwarranted under the circumstances, with 
reference to the General Factors Affecting Administrative Action set 
forth in the Guidelines contained in appendix A to part 501. The 
response should include all documentary or other evidence available to 
the alleged violator that supports the arguments set forth in the 
response. OFAC will consider all relevant materials submitted in the 
response.
    (c) Determination--(1) Determination that a Finding of Violation is 
warranted. If, after considering the response, OFAC determines that a 
final Finding of Violation should be issued, OFAC will issue a final 
Finding of Violation that will inform the violator of its decision. A 
final 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.
    (2) Determination that a Finding of Violation is not warranted. If, 
after considering the response, OFAC determines a Finding of Violation 
is not

[[Page 28375]]

warranted, then OFAC will inform the alleged violator of its decision 
not to issue a final Finding of Violation.

    Note 1 to paragraph (c)(2):  A determination by OFAC that a 
final Finding of Violation is not warranted does not preclude OFAC 
from pursuing other enforcement actions consistent with the 
Guidelines contained in appendix A to part 501 of this chapter.
    (d) Representation. A representative of the alleged violator may 
act on behalf of the alleged violator, but any oral communication 
with OFAC prior to a written submission regarding the specific 
alleged violations contained in the initial Finding of Violation 
must be preceded by a written letter of representation, unless the 
initial Finding of Violation was served upon the alleged violator in 
care of the representative.


    Dated: June 12, 2018.
Bradley T. Smith,
Acting Deputy Director, Office of Foreign Assets Control.
[FR Doc. 2018-12887 Filed 6-18-18; 8:45 am]
BILLING CODE 4810-AL