Export Administration Regulations End-User Controls: Imposition of Restrictions on Certain Persons Identified on the List of Specially Designated Nationals and Blocked Persons (SDN List)
| Published date | 21 March 2024 |
| Record Number | 2024-06067 |
| Citation | 89 FR 20107 |
| Court | Industry And Security Bureau |
| Section | Rules and Regulations |
Federal Register, Volume 89 Issue 56 (Thursday, March 21, 2024)
[Federal Register Volume 89, Number 56 (Thursday, March 21, 2024)]
[Rules and Regulations]
[Pages 20107-20116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06067]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 740, 744 and 746
[Docket No. 240308-0076]
RIN 0694-AI82
Export Administration Regulations End-User Controls: Imposition
of Restrictions on Certain Persons Identified on the List of Specially
Designated Nationals and Blocked Persons (SDN List)
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
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SUMMARY: In this final rule, the Bureau of Industry and Security (BIS)
makes changes to the end-user controls of the Export Administration
Regulations (EAR) to add end-user controls, and in certain cases expand
existing end-user controls, on certain persons identified on the List
of Specially Designated Nationals and Blocked Persons (SDN List)
maintained by the Department of the Treasury's Office of Foreign Assets
Control (OFAC).
DATES: This rule is effective on March 21, 2024.
FOR FURTHER INFORMATION CONTACT: For questions on this final rule,
contact W. Collmann Griffin, Senior Policy Advisor, International
Policy Office, Bureau of Industry and Security, Department of Commerce,
Phone: 202-482-1430, Email: [email protected].
For emails, include ``EAR requirements for SDNs'' in the subject
line.
SUPPLEMENTARY INFORMATION:
I. Background
The U.S. Government has a number of list-based tools to restrict
economic activities of individuals and entities to protect U.S.
national security or foreign policy interests. BIS employs end-user
controls under the Export Administration Regulations (EAR), 15 CFR
parts 730-774, including the Entity List (Supplement No. 4 to part 744
of the EAR), to impose license requirements for the export, reexport,
and transfer (in-country) of items subject to the EAR. End-user
requirements and Entity List additions allow for the monitoring of
items subject to the EAR, including less-sensitive items. In the
context of the Entity List, BIS maintains stringent license review
policies and restrictions on the use of EAR license exceptions specific
to each listed entity.
The U.S. Department of the Treasury's Office of Foreign Assets
Control (OFAC) maintains the List of Specially Designated Nationals and
Blocked Persons (SDN List) to identify persons whose property or
interests in property that are or come within the United States or in
the possession or control of U.S. persons, wherever located, are
blocked (see appendix A to 31 CFR chapter V and https://www.treas.gov/sdn). These targeted economic sanctions tools enable the U.S.
Government to escalate economic pressure and promote deterrence while
mitigating unintended economic effects on the United States and our
partners and allies.
After reviewing categories of end users and global activities that
implicate both financial and export control concerns, BIS has
determined to implement EAR license requirements for all items subject
to the EAR for all persons blocked under eleven OFAC-administered
sanctions programs. BIS will also continue to apply license
requirements involving all items subject to the EAR in connection with
persons sanctioned under three OFAC-administered sanctions programs.
The EAR restrictions involving these
[[Page 20108]]
fourteen OFAC-administered sanctions programs serve as a force
multiplier and complement OFAC's blocking sanctions, which prohibit all
transactions by U.S. persons or within (or transiting) the United
States that involve any property or interests in property of designated
or blocked persons, unless authorized by a general or specific license
issued by OFAC, or exempt.
The imposition of these EAR license requirements for exports,
reexports, and transfers (in-country) allows for the EAR controls to
act as a backstop for activities over which OFAC does not exercise
jurisdiction, including deemed exports and deemed reexports, and for
reexports and transfers (in-country) that would otherwise not involve
U.S. persons (e.g., U.S. financial institutions). Notably, the new
license requirements allow for controls on items outside the United
States, complementing the existing authority in many OFAC programs to
impose blocking sanctions on persons who materially assist, sponsor, or
provide financial, material, or technological support for, or goods or
services to or in support of, SDNs, even outside of U.S. jurisdiction.
In this final rule, persons blocked under fourteen OFAC sanctions
programs will be subject to stringent export controls under the EAR.
Each program is listed below with the corresponding sanctions authority
and program code or ``identifier,'' arranged by thematic program to
assist understanding.
Related to Russia's invasion of Ukraine:
Belarus Sanctions Regulations, 31 CFR part 548; Executive
Order 13405 (OFAC program code or ``identifier'' [BELARUS]);
Executive Order 14038 ([BELARUS-EO14038]);
Russian Harmful Foreign Activities Sanctions Regulations
31 CFR part 587; Executive Order 14024 [RUSSIA-EO14024];
Executive Order 13660 ([UKRAINE-EO13660]);
Executive Order 13661 ([UKRAINE-EO13661]);
Executive Order 13662 [UKRAINE-EO13662]; and
Executive Order 13685 ([UKRAINE-EO13685]).
Related to terrorism:
Foreign Terrorist Organizations Sanctions Regulations, 31
CFR part 597 [FTO]; and
Global Terrorism Sanctions Regulations, 31 CFR part 594
[SDGT].
Related to WMD:
Weapons of Mass Destruction Proliferators Sanctions
Regulations, 31 CFR part 544 [NPWMD].
Related to narcotics trafficking or other criminal networks:
Executive Order 14059 [ILLICIT DRUGS-EO14059];
Narcotics Trafficking Sanctions Regulations, 31 CFR part
536 [SDNT];
Foreign Narcotics Kingpin Sanctions Regulations, 31 CFR
part 598 [SDNTK]; and
Transnational Criminal Organizations Sanctions
Regulations, 31 CFR part 590; Executive Order 13581 [TCO].
See Program Tag Definitions for OFAC Sanctions Lists for additional
information: https://ofac.treasury.gov/specially-designated-nationals-list-sdn-list/program-tag-definitions-for-ofac-sanctions-lists.
Prior to this final rule, persons designated under two of these
fourteen OFAC-administered sanctions programs (i.e., [ILLICIT DRUGS-
EO14059] and [TCO]) were not subject to restrictions under the EAR.
Persons designated under the other twelve programs were already subject
to comprehensive export controls under part 744 provisions, or under
provisions in parts 740 or 746 of the EAR. As described below under
sections II and III, this final rule expands certain of these part 744
provisions and revises part 744 to feature a comprehensive,
consolidated provision that references all fourteen OFAC-administered
sanctions programs. It also consolidates the relevant export control
restrictions from part 740 and 746 under this new provision in part
744.
The EAR, prior to this final rule, imposed licensing restrictions
on export, reexport, and transfer (in-country) transactions involving
all items subject to the EAR in which persons blocked under three OFAC-
administered sanctions programs--[FTO], [SDGT], and [NPWMD]--served as
parties to the transaction. This rule eliminates the three applicable
underlying sections in part 744 and adds their contents to a
consolidated single section under Sec. 744.8.
In addition, prior to this final rule, the EAR imposed licensing
restrictions on exports, reexports, and transfers (in-country) of
`luxury goods' in which persons blocked under seven of these OFAC
administered sanctions programs--[BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], and
[UKRAINE-EO13685]--served as parties to the transaction. This final
rule expands the license requirement to all items subject to the EAR
and moves the relevant regulatory contents from current Sec.
746.10(a)(2) into a consolidated single section of the EAR under Sec.
744.8.
Prior to this final rule, the EAR also imposed restrictions on the
availability of license exceptions for transactions involving certain
items in which persons blocked under two of these OFAC-administered
sanctions programs, [SDNT] and [SDNTK], served as parties to the
transaction. This final rule restricts such license exception
availability further by adding a license requirement for all items
subject to the EAR when a person blocked pursuant to these two programs
is a party to the transaction and places the substantive regulatory
contents in a consolidated single section of the EAR under Sec. 744.8.
BIS will continue its regular coordination with OFAC to impose
restrictions on persons designated under other OFAC blocking or
sanctions programs in cases in which BIS determines that its export
controls would be an effective tool to complement OFAC's sanctions
programs. All interested parties may consult the Commerce Department-
maintained Consolidated Screening List (CSL), available to the public
at https://www.trade.gov/consolidated-screening-list, as a single-
search portal to identify individuals and entities who appear on lists
maintained by the Departments of Commerce, the Treasury, and State.
This final rule also makes several structural and technical changes
to part 744 and removes four end-user control provisions under part 744
of the EAR that are either outdated or obsolete in light of changes
made to other federal authorities.
Specifically, this final rule:
A. Imposes end-user controls under the EAR involving persons
identified on OFAC's SDN List under eleven categories with the
following identifiers: [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], [UKRAINE-
EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
B. Consolidates into a single section the contents of several part
744 SDN-related end-user provisions under the EAR. Prior to this final
rule, part 744 included five separate sections involving SDNs
designated in or pursuant to several specified Executive Orders
(E.O.s). This final rule consolidates the contents of those five
sections and the eleven new SDN-related restrictions so that all of the
SDN-related end-user controls in part 744 will be in the same section.
As part
[[Page 20109]]
of this regulatory action, BIS removes from the EAR two provisions: one
provision involving a terminated E.O. that had targeted Specially
Designated Terrorists (SDTs) and a second provision involving Iraq that
does not address current policy concerns under the EAR.
C. Removes two end-user control provisions in part 744 of the EAR
that are no longer needed because of the existence of a broader end-
user control in Sec. 744.11 that allows BIS to impose restrictions on
entities acting contrary to the national security or foreign policy
interests of the United States.
II. Expansion of SDN-Related End-User Controls Under the EAR
A. Persons Designated on SDN List With the Identifiers [BELARUS],
[BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-EO13660], [UKRAINE-
EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685]
1. Export Controls Implemented Against Russia and Belarus
In response to Russia's February 2022 invasion of Ukraine, BIS
imposed extensive sanctions on Russia under the EAR as part of the
final rule, ``Implementation of Sanctions Against Russia Under the
Export Administration Regulations (EAR)'' (the Russia Sanctions Rule)
(87 FR 12226, March 3, 2022). To address Belarus's complicity in the
invasion, BIS imposed similar sanctions on Belarus under the EAR in a
final rule, ``Implementation of Sanctions Against Belarus'' (``Belarus
Sanctions Rule'') (87 FR 13048, March 6, 2022). During the last two
years, BIS has published a number of additional final rules
strengthening the export controls on Russia and Belarus, including
measures undertaken in coordination with U.S. allies and partners.
Most recently, in a January 2024 rule, ``Implementation of
Additional Sanctions Against Russia and Belarus Under the Export
Administration Regulations (EAR) and Refinements to Existing
Controls,'' BIS strengthened its sanctions under the EAR against Russia
and Belarus, including by expanding the scope of the EAR's Russian and
Belarusian Industry Sector Sanctions, expanding the EAR's Russia/
Belarus foreign direct product rule to cover certain EAR99 antennas,
antenna reflectors, and parts thereof, and other actions to prohibit
exports or reexports of military and spacecraft-related items to Russia
and Belarus (89 FR 4804, January 25, 2024). The Department of Commerce
took these actions to enhance the effectiveness of its controls on
these two countries and to better align them with those implemented by
U.S. allies and partners.
2. Designations Made Pursuant to E.O.s 13405, 13660, 13661, 13662,
13685, 14024, and 14038 and BIS Actions To Complement Such Designations
OFAC has taken action to address Russia's February 2022 invasion of
Ukraine, including adding various persons to OFAC's SDN List pursuant
to E.O. 13405, 13660, 13661, 13662, 13685, 14024, and 14038. Persons
who are blocked pursuant to one of these seven E.O.s are designated on
the SDN List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] (see http://www.treas.gov/sdn).
In this rule, in order to complement the designations made under
E.O. 13405, 13660, 13661, 13662, 13685, 14024, or 14038, BIS amends the
EAR to revise Sec. 744.8 to impose a license requirement for all
exports, reexports, or transfers (in-country) of items subject to the
EAR when a person designated under one of these seven E.O.s is a party
to the transaction as defined in Sec. 748.5(c) through (f). In
particular, these new EAR license requirements under Sec. 744.8 will
apply to any reexport or transfer (in-country) transaction that is not
subject to regulation by OFAC, including due to the fact that the
transaction does not involve U.S. persons or the U.S. financial system,
thereby ensuring that the U.S. Government can restrict such activity.
These new license requirements will apply broadly to all items subject
to the EAR. There will also be a prohibition on the use of any license
exceptions, although as specified in new Sec. 744.8(a)(2), the EAR
authorization requirements will take into account OFAC general licenses
and exemptions to ensure consistency, and a restrictive presumption of
denial review policy will apply to license applications involving these
persons as parties to the transaction.
These EAR changes will limit these persons' access to items subject
to the EAR, regardless of their source. Also, these actions will
advance the U.S. national security and foreign policy objectives set
forth in E.O. 13405, 13660, 13661, 13662, 13685, 14024, and 14038, and
build upon the policy objectives set forth in the Russia Sanctions
rules and in the Belarus Sanctions rules as described above. This rule
is part of a set of larger U.S. Government and partner and allied
country actions intended to increase the financial, economic, and
strategic consequences of Russia's further invasion of Ukraine and
Belarus's substantial enabling of such invasion, and Russia's ongoing
military aggression in Ukraine during the past two years.
In order to avoid duplication, if OFAC issues a general license or
specific license that authorizes a transaction with or involving a
person blocked under the applicable OFAC regulations and included on
the SDN List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] or such transaction is otherwise exempt from OFAC's
regulations, then no additional BIS authorization is required for
exports, reexports, or transfers (in-country) of any item subject to
the EAR when that person is a party to the transaction as defined in
Sec. 748.5(c) through (f), provided that a license would otherwise
only be required under Sec. 744.8. A BIS license would still be
required for exports, reexports, or transfers (in-country) that
implicate other parts of the EAR, including parts 742 and 746, as well
as supplement no. 4 to part 744 or other end-use or end-user controls.
For example, an entity with the SDN List identifier [RUSSIA-EO14024]
would be subject to the license requirements under Sec. 744.8 but
could also be listed on the Entity List in supplement no. 4 to part
744. If the entity were listed on the Entity List, a party seeking to
make an export, rexport, or transfer (in-country) would have to
overcome the additional EAR license requirements. Alternatively, if the
item were highly controlled, such as a ``600 series'' military item,
the party seeking to make an export, reexport, or transfer (in-country)
would have to overcome Commerce Control List (CCL)-based license
requirements in addition to requirements set forth in Sec. 744.8.
BIS estimates new license requirements under Sec. 744.8 for
persons included on the SDN List with the identifier [BELARUS],
[BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-EO13660], [UKRAINE-
EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685] will result in an
additional five license applications being submitted to BIS annually.
B. Persons Designated on the SDN List With [ILLICIT DRUGS-EO14059],
[SDNT], [SDNTK], or [TCO] Identifiers Related to Narcotics or Criminal
Activities
OFAC has taken various actions to address narcotics or other
criminal activities, including by adding various
[[Page 20110]]
persons to the SDN List with the identifiers [ILLICIT DRUGS-EO14059],
[SDNT], [SDNTK], or [TCO].
This final rule adds persons designated on the SDN List with the
following identifiers to Sec. 744.8 of the EAR: [ILLICIT DRUGS-
EO14059] (persons designated pursuant to E.O. 14059); [SDNT] (persons
designated pursuant to the Narcotics Trafficking Sanctions Regulations,
31 CFR part 536); [SDNTK] (persons designated pursuant to the Foreign
Narcotics Kingpin Sanctions Regulations, 31 CFR part 598); and [TCO]
(persons designated pursuant to the Transnational Criminal
Organizations Sanctions Regulations, 31 CFR part 590 and E.O. 13581).
Consistent with these SDN-related end-user controls, Sec. 744.8, as
revised and consolidated by this final rule, will impose license
requirements for all items subject to the EAR, restrict the
availability of all license exceptions, and specify a presumption of
denial license review policy.
This rule removes and reserves Sec. 740.2(a)(22) as a conforming
change to the addition of two of these SDN List identifiers to Sec.
744.8. Due to the fact that Sec. 744.8 will include a restriction on
the use of EAR license exceptions for export, reexport, and transfer
(in-country) transactions involving all items subject to the EAR, Sec.
740.2(a)(22) is no longer needed.
Prior to this final rule, the SDN identifiers [SDNT] and [SDNTK]
were included in a general restriction on the use of license exceptions
under Sec. 740.2(a)(22) for certain items. This general restriction
specified that the export, reexport, or transfer (in-country) of any
item classified under a 0x5zz Export Control Classification Number
(ECCN) (i.e., firearms and related items) could not be authorized under
an EAR license exception when a party to the transaction was designated
on the SDN List with one of these identifiers. Because persons
designated on the SDN List with these identifiers were involved in
narcotics or other criminal activities, BIS had restricted the use of
all EAR license exceptions for the firearms and related items
controlled under the 0x5zz ECCNs to protect U.S. national security and
foreign policy interests. Due to the fact that there is a worldwide
license requirement under the EAR for firearms, BIS did not impose a
license requirement under part 744 for transactions involving persons
on the SDN List with these identifiers who are parties to the
transaction, and instead relied on the CCL-based license requirements
and related license review policies.
BIS has determined that the license requirements for export,
reexport, and transfer (in-country) transactions in which persons
designated on the SDN List with the identifiers [ILLICIT DRUGS-
EO14059], [SDNT], [SDNTK], or [TCO] are parties to the transaction
should be expanded from CCL-based requirements to all items subject to
the EAR to further protect U.S. national security and foreign policy
interests. In order to avoid duplication, U.S. persons are not required
to seek separate BIS authorization for an export, reexport, or transfer
(in-country) of any item subject to both the EAR and OFAC's regulations
when a person identified in Sec. 744.8 is a party to the transaction
as defined in Sec. 748.5(c) through (f). Therefore, if OFAC authorizes
an export from the United States or an export, reexport, or transfer
(in-country) by a U.S. person to a person identified in Sec. 744.8, no
separate BIS authorization is required.
BIS estimates new license requirements under Sec. 744.8 for
transactions in which persons designated on the SDN List with the
identifiers [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], or [TCO] are
parties to the transaction will result in an additional 15 license
applications being submitted to BIS annually.
III. Consolidation of the SDN-Related End-User Controls Under the EAR
A. Increasing Use and Expansion of End-User Controls
The increasing use of end-use and end-user controls under the EAR
has led to an expansion of the number of sections under part 744,
``Control Policy: End User and End-Use Based.'' For example, there are
five sections similarly structured in part 744 that prior to this final
rule imposed restrictions on certain persons designated on the SDN
List. This rule simplifies part 744 by combining these sections into a
single section that will specify the requirements under the EAR and by
adding the eleven new SDN identifiers described above under section II
to the same consolidated section. This streamlining and restructuring
will reduce the compliance burden on parties because it will be easier
to review one consolidated SDN-related section instead of fourteen
separate SDN-related sections.
This final rule removes and reserves Sec. 744.13, relating to
persons identified on the SDN List with the [SDT] identifier, which
OFAC no longer uses. The now-obsolete [SDT] restrictions in Sec.
744.13 are related to E.O. 12947 of January 23, 1995, which was revoked
on September 9, 2019, by E.O. 13886. E.O. 13886 also modified E.O.
13224, which underlies the Global Terrorism Sanctions Regulations (31
CFR part 594) referenced in Sec. 744.12. The existing [SDT] SDNs were
re-designated as [SDGT] SDNs upon E.O. 12947's revocation. This final
rule also does not include the restrictions related to SDNs with the
[IRAQ2] identifier under Sec. 744.18 as part of the consolidation
under revised Sec. 744.8 because the vast majority of these natural
persons or entities are either dead or no longer in existence, and they
remain designated as SDNs primarily for purposes of blocking financial
assets. Therefore, these additional EAR requirements are no longer
needed.
B. Consolidation of EAR Controls Involving Items Destined for Certain
Persons Designated on the SDN List
1. Overview of the Consolidated Controls
In part 744, this final rule removes and reserves Sec. Sec.
744.12, 744.13, 744.14, and 744.18. For Sec. Sec. 744.12 and 744.14,
this final rule adds the substance of these controls to the revised
Sec. 744.8. This final rule does not add the controls under Sec.
744.13 or under Sec. 744.18 for the reasons described above under
section III.A.
In Sec. 744.8, this final rule revises this section, including the
heading, to reflect the consolidation of Sec. Sec. 744.12 and 744.14
therein. This final rule additionally makes certain clarifying changes
to Sec. 744.8, including clarifying that the specified EAR
requirements apply to transfers (in-country) and that OFAC general
licenses remain available for entities that are otherwise subject to
these license requirements under Sec. 744.8.
Also, in Sec. 744.8, this rule expands the end-user controls under
part 744 to extend the controls to transactions featuring as a party to
the transaction a person designated on the SDN List with the
identifiers [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024], [UKRAINE-
EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685] as
described under section II.A, and with the identifiers [ILLICIT DRUGS-
EO14059], [SDNT], [SDNTK], or [TCO] as described under section II.B of
this final rule.
2. Comparison of the Original and Consolidated EAR Controls for SDNs
Under Part 744
The EAR imposes license requirements, license review policies, and
restrictions on the use of license exceptions under certain sections of
part
[[Page 20111]]
744 of the EAR for transactions featuring as a party to the transaction
certain persons designated on the SDN List with specified identifiers,
as described in section III.B.1.
Table 1 identifies these EAR restrictions prior to this final rule
and the corresponding EAR section for these end-user requirements under
Sec. 744.8, as revised. Because of the number of sections this final
rule removes and consolidates under part 744, BIS includes Table 1 to
assist the exporting community's understanding of these changes.
Table 2 identifies the eleven new SDN List identifiers ([BELARUS],
[ILLICIT DRUGS-EO14059], [RUSSIA-EO14024], [SDNT], [SDNTK], [TCO],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], and [UKRAINE-
EO13685]) that this final rule adds to the end-user requirements under
part 744 of the EAR. BIS includes Table 2 to assist the exporting
community's understanding of these changes, including specifying the
requirements in place prior to this final rule and the new and expanded
requirements under this final rule.
Table 1--Existing SDN List Identifiers That Require a License for All Items Subject to the EAR That Are Being
Consolidated Into Sec. 744.8 or Are Otherwise Being Removed From the EAR
----------------------------------------------------------------------------------------------------------------
EAR section
Program identifier Sanctions program OFAC sanctions list prior to this New EAR section in
final rule this final rule
----------------------------------------------------------------------------------------------------------------
Terrorism-related
----------------------------------------------------------------------------------------------------------------
[FTO]......................... Foreign Terrorist SDN Sec. 744.14 Sec. 744.8.
Organizations
Sanctions
Regulations, 31
CFR part 597.
[SDGT]........................ Global Terrorism SDN Sec. 744.12 Sec. 744.8.
Sanctions
Regulations, 31
CFR part 594.
* [SDT]....................... Terrorism N/A Sec. 744.13 N/A, because this
Regulations, 31 identifier is no
CFR part 595. longer used.
----------------------------------------------------------------------------------------------------------------
WMD related
----------------------------------------------------------------------------------------------------------------
[NPWMD]....................... Weapons of Mass SDN Sec. 744.8 Sec. 744.8.
Destruction
Proliferators
Sanctions
Regulations, 31
CFR part 544.
----------------------------------------------------------------------------------------------------------------
Iraq related
----------------------------------------------------------------------------------------------------------------
* [IRAQ2]..................... E.O. 13315; E.O. SDN Sec. 744.18 N/A, because the
13350. vast majority of
these persons or
entities are
either dead or
otherwise no
longer in
existence.
----------------------------------------------------------------------------------------------------------------
* Denotes SDN List identifiers that are being removed from part 744 license requirements in this final rule.
Some of the SDN List identifiers in Table 2 are new to the EAR and
others were previously subject to EAR license requirements or other
restrictions that are being expanded in this final rule with the
additions of these SDN List identifiers to Sec. 744.8.
Table 2--SDN List Identifiers Added to Sec. 744.8
----------------------------------------------------------------------------------------------------------------
New EAR
EAR section section in
Program identifier Sanctions program OFAC sanctions list prior to this this final
final rule rule
----------------------------------------------------------------------------------------------------------------
Related to Russia's invasion of Ukraine
----------------------------------------------------------------------------------------------------------------
[BELARUS]........................... 31 CFR part 548.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[BELARUS-EO14038]................... 31 CFR part 548.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[RUSSIA-EO14024].................... Russian Harmful SDN Sec. 746.10, Sec. 744.8
Foreign which required a
Activities license for
Sanctions `luxury goods'
Regulations, 31 identified in
CFR part 587; supplement no. 5
E.O. 14024. to part 746.
[UKRAINE-EO13660]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[UKRAINE-EO13661]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[UKRAINE-EO13662]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
[[Page 20112]]
[UKRAINE-EO13685]................... 31 CFR part 589.. SDN Sec. 746.10, Sec. 744.8
which required a
license for
`luxury goods'
identified in
supplement no. 5
to part 746.
----------------------------------------------------------------------------------------------------------------
Related to narcotics trafficking or other criminal networks
----------------------------------------------------------------------------------------------------------------
[ILLICIT DRUGS-EO14059]............. 31 CFR part 599.. SDN N/A (new SDN List- Sec. 744.8
related
identifier).
[SDNT].............................. Narcotics SDN Sec. Sec. 744.8
Trafficking 740.2(a)(22),
Sanctions which restricted
Regulations, 31 the use of
CFR part 536. license
exceptions for
0x5zz items, but
did not impose
additional
license
requirements for
these persons.
This final rule
removes
paragraph
(a)(22) because
it will be
addressed under
Sec. 744.8.
[SDNTK]............................. Foreign Narcotics SDN Sec. Sec. 744.8
Kingpin 740.2(a)(22),
Sanctions which restricted
Regulations, 31 the use of
CFR part 598. license
exceptions for
0x5zz items but
did not impose
additional
license
requirements for
these persons.
This final rule
removes
paragraph
(a)(22) because
it will be
addressed under
Sec. 744.8.
[TCO]............................... Transnational SDN N/A (new SDN List- Sec. 744.8
Criminal related
Organizations identifier).
Sanctions
Regulations, 31
CFR part 590;
Executive Order
13581.
----------------------------------------------------------------------------------------------------------------
IV. Removal of Two End-User Control Sections Under the EAR
Section 744.11 (License requirements that apply to entities acting
or at significant risk of acting contrary to the national security or
foreign policy interests of the United States), provides a basis for
BIS to impose license requirements by adding persons to the Entity List
who have been involved, are involved, or pose a significant risk of
being or becoming involved in activities that are contrary to the
national security or foreign policy interests of the United States.
Other sections of parts 744 (e.g., Sec. 744.3, relating to activities
of concern involving missile technology) and 746 are also used to add
persons to the Entity List. The substantive criteria set forth in two
sections of part 744, Sec. Sec. 744.10 (Restrictions on certain
entities in Russia) and 744.20 (License requirements that apply to
certain sanctioned entities), are duplicative of Sec. 744.11 and/or
other provisions in parts 744 and 746), which provide sufficient
authority to add to the Entity List persons meeting the criteria set
forth in those two sections. Therefore, this final rule removes and
reserves Sec. Sec. 744.10 and 744.20.
This final rule will reduce by two the number of sections that
exporters, reexports, and transferors will need to review in part 744.
Taking into account the additional four sections that this final rule
removes as part of the consolidation of the SDN restrictions under
Sec. 744.8, as described under section III above, as well as the
removal of the outdated SDN-related sections Sec. Sec. 744.13 and
744.18, these changes will result in the removal of a total of six
sections from part 744, making the end-user controls under part 744
simpler (thereby facilitating compliance) and more effective while
continuing to serve to protect and advance U.S. national security and
foreign policy interests.
V. Amendments to the EAR
In Sec. 740.2, this final rule removes and reserves paragraph
(a)(22) from the EAR because its restrictions on certain SDNs have been
moved to the broader end-user restrictions under Sec. 744.8.
In Sec. 744.1, this final rule revises paragraph (a)(1)
(Introduction), to remove references to Sec. Sec. 744.12, 744.13,
744.14, and 744.18, and makes changes to the reference to Sec. 744.8
to reflect that this section will now be the single section in part 744
that specifies end-user license requirements for export, reexport, and
transfer (in-country) transactions involving certain SDNs. This final
rule also removes the sentences referencing Sec. Sec. 744.18 and
744.20, which are simultaneously being removed from the EAR. As a
conforming change, this final rule revises the sentence that references
Sec. 744.7 to add the term ``transfer (in-country)'' for consistency
with the requirements in Sec. 744.7. For clarification purposes, this
final rule revises the section that references Sec. 744.19 to add the
term ``transfer (in-country).'' In the sentence that specifies that
these sections of part 744 include license review policies for export
license applications submitted as required by these sections, this
final rule adds the phrase ``reexport, and in-country transfer,''
because the license requirements of part 744 extend to reexports and
transfers (in-country). In the sentence that refers to Sec. 744.21,
this final rule makes updates for consistency with the existing
requirements under Sec. 744.21 for Russia and Belarus, which are
different than those for the other countries identified in Sec.
744.21.
In Sec. 744.7(b)(2) (Exports to U.S. or Canadian Airline's
Installation or Agent), this final rule adds the phrase ``reexports,
and transfers (in-country)'' for clarity. This addition is consistent
with the agency's longstanding position that this paragraph is
available for reexports and transfers (in-country). In Sec. 744.8
(Restrictions on exports and reexports to persons designated pursuant
to E.O. 13382--blocking property of weapons of mass destruction
proliferators and their supporters), this final rule revises this
section heading to now read as ``Restrictions on exports, reexports,
and transfers (in-country) when certain persons designated on the List
of Specially Designated Nationals and Blocked Persons (SDN List) are a
party to the transaction'' to reflect the broadened scope of this
revised section.
Paragraph (a)(1) (Scope) defines the scope of the revised Sec.
744.8. The final rule revises Sec. 744.8 to impose EAR license
requirements, specify license
[[Page 20113]]
review policies, and set forth restrictions on the use of license
exceptions for exports, reexports, and transfers (in-country) when a
person who is designated on the SDN List with any of the following
identifiers is a party to the transaction as described in Sec.
748.5(c) through (f): [BELARUS], [BELARUS-EO14038], [RUSSIA-EO14024],
[UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], [UKRAINE-
EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
Paragraph (a)(1) will also include a sentence specifying that these
persons are set forth in appendix A to 31 CFR chapter V and on OFAC's
website at https://www.treas.gov/sdn to assist exporters, reexporters,
and transferors in identifying these persons. This final rule adds a
new note 1 to paragraph (a)(1) to include a cross reference to direct
the public to the OFAC website for Program Tag Definitions for OFAC
Sanctions Lists for additional background rather than carrying over the
background information from the underlying part 744 SDN-related
sections.
Paragraph (a)(2) specifies the relationship between BIS and OFAC
for these part 744 requirements specified under Sec. 744.8. Paragraph
(a)(2) clarifies that these EAR controls supplement and strengthen the
sanctions that are imposed by OFAC on these SDNs to better ensure that
U.S. national security and foreign policy interests are protected in
the case of export, reexport, and transfer (in-country) transactions
involving items subject to the EAR. Paragraph (a)(2) includes a
sentence identifying the most likely scenarios in which the OFAC
regulations generally would not apply but the EAR controls would. This
final rule also includes a sentence at the end of paragraph (a)(2) to
specify that in order to avoid imposing a dual licensing requirement,
the EAR authorization requirements specified in this section do not
require a separate EAR authorization if the activities are authorized
under an OFAC specific or general license or are exempted under OFAC's
regulations.
This final rule adds one note to paragraph (a). New note 2
clarifies that the Entity List in supplement no. 4 to part 744 includes
certain persons that have also been designated on the SDN List. This
note includes a cross reference to Sec. 744.11 and supplement no. 4 to
part 744 for requirements and related license review policies for these
entities, which take precedence over those set forth in Sec. 744.8.
BIS also clarifies in new note 1 that BIS requires an EAR authorization
as specified in the license requirement column on the Entity List for
these persons regardless of whether the export, reexport, or transfer
(in-country) is authorized under an OFAC specific or general license.
In Sec. 744.8(b) (License requirements), this final rule specifies
that unless the export, reexport, or transfer (in-country) is
authorized under an OFAC specific or general license or exempt under
OFAC's regulations, a license is required under the EAR for the export,
reexport, or transfer (in-country) of any item ``subject to the EAR''
when a person who is designated on OFAC's SDN List with any of the
following identifiers is a party to the transaction as described in
Sec. 748.5(c) through (f): [BELARUS], [BELARUS-EO14038], [RUSSIA-
EO14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662],
[UKRAINE-EO13685], [ILLICIT DRUGS-EO14059], [SDNT], [SDNTK], and [TCO].
This rule also adds one sentence at the end of paragraph (b) to specify
that a BIS license is not required for transactions described in this
paragraph that would have otherwise met all of the terms and conditions
of an OFAC general license if the transactions had been subject to OFAC
jurisdiction.
In Sec. 744.8(c) (License exceptions), this final rule specifies
that no license exceptions may overcome the license requirements in
this section, except in the case of entities that are also listed on
the Entity List in supplement no. 4 to part 744 and for which certain
license exceptions are available. In such circumstances, the specified
license exceptions may overcome the license requirements of this
section and supplement no. 4 to part 744 that would otherwise apply.
In Sec. 744.8(d) (License review policy), this final rule
specifies that applications for licenses required by this section will
be subject to a presumption of denial review policy, except when note 1
to paragraph (a) is applicable. When note 1 to paragraph (a)(1) is
applicable, the license review policy under the Entity List entry for
that person would take precedence. This final rule also includes a
cross reference in paragraph (d) to direct exporters, reexporters, and
transferors to consult OFAC concerning transactions subject to OFAC
licensing requirements.
In Sec. 744.8(e) (Violations), this final rule includes, in
streamlined form, information included prior to this final rule
regarding violations of the EAR. Specifically, paragraph (e)(1) states
that any export, reexport, or transfer (in-country) by a U.S. person of
any item subject both to the EAR and OFAC's regulations and not
authorized by OFAC when a person identified in paragraph (a)(1) is a
party to the transaction as defined in Sec. 748.5(c) through (f)
constitutes a violation of the EAR. This final rule also adds one
sentence to clarify that this paragraph does not apply to entities
identified under both this section and on the Entity List in supplement
no. 4 to part 744. EAR violations involving entities identified under
both this section and the Entity List, will be addressed pursuant to
Sec. Sec. 744.11 and 744.16.
This final rule adds paragraph (e)(2) to specify that any export,
reexport, or transfer (in-country) by a U.S. person of any item subject
to the EAR that is not subject to OFAC's regulations and not authorized
by BIS when a person identified in paragraph (a)(1) is a party to the
transaction as defined in Sec. 748.5(c) through (f) constitutes a
violation of the EAR. Paragraph (e)(2) also specifies that any export
from abroad, reexport, or transfer (in-country) by a non-U.S. person of
any item subject to the EAR and not authorized by BIS when a person
identified in paragraph (a)(1) is a party to the transaction as defined
in Sec. 748.5(c) through (f) constitutes a violation of the EAR.
This final rule also includes a note 3 to Sec. 744.8 to specify
that this section does not implement, construe, or limit the scope of
any criminal statute, including but not limited to 18 U.S.C.
2339B(a)(1) and 2339A, and does not excuse any person from complying
with any criminal statute, including but not limited to 18 U.S.C.
2339B(a)(1) and 18 U.S.C. 2339A. This note is included for consistency
with previous SDN-related restrictions under part 744 of the EAR.
In part 744, this final rule removes and reserves Sec. Sec. 744.12
and 744.14 as conforming changes to the consolidation under Sec. 744.8
of the requirements previously specified in those sections. Also in
part 744, this final rule removes and reserves Sec. Sec. 744.10,
744.13, 744.18, and 744.20 because these sections are no longer needed.
In Sec. 746.10 (`Luxury goods' sanctions against Russia and
Belarus and Russian and Belarusian oligarchs and malign actors), this
final rule revises paragraph (a)(2) to remove the license requirement
and include a cross reference to Sec. 744.8 of the EAR for additional
license requirements for persons designated on OFAC's SDN List with the
identifier [BELARUS-EO14038], [BELARUS], [RUSSIA-EO14024], [UKRAINE-
EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685].
The license requirement under Sec. 744.8 is for all items subject to
the EAR, which includes all `luxury goods' identified in supplement no.
5 to part 746. This rule adds to Sec. 746.10 a
[[Page 20114]]
cross reference to the expanded license requirements under Sec. 744.8
to alert exporters, reexporters, and transferors to the fact that
persons with these SDN identifiers remain subject to a license
requirement (expanded in scope by this rule) under Sec. 744.8.
Savings Clause
For the changes being made in this final rule, shipments of items
removed from eligibility for a License Exception or export, reexport,
or transfer (in-country) without a license (NLR) as a result of this
regulatory action that were en route aboard a carrier to a port of
export, reexport, or transfer (in-country), on March 21, 2024, pursuant
to actual orders for export, reexport, or transfer (in-country) to or
within a foreign destination, may proceed to that destination under the
previous eligibility for a License Exception or export, reexport, or
transfer (in-country) without a license (NLR) provided the export,
reexport, or transfer (in-country) is completed no later than on April
22, 2024.
Export Control Reform Act of 2018
On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. 4801-4852). ECRA provides the legal basis for
BIS's principal authorities and serves as the authority under which BIS
issues this rule.
Rulemaking Requirements
1. BIS has examined the impact of this rule as required by
Executive Orders 12866, 13563, and 14094, which direct agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (e.g., potential economic, environmental, public,
health, and safety effects, distributive impacts, and equity). This
final rule is considered a ``significant regulatory action'' under sec.
3(f) of E.O. 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number. This rule
involves the following OMB-approved collections of information subject
to the PRA: 0694-0088, ``Multi-Purpose Application,'' which carries a
burden hour estimate of 29.6 minutes for a manual or electronic
submission; 0694-0096 ``Five Year Records Retention Period,'' which
carries a burden hour estimate of less than one minute; and 0607-0152
``Automated Export System (AES) Program,'' which carries a burden hour
estimate of three minutes per electronic submission. This rule changes
the respondent burden under these control numbers by increasing the
estimated number of submissions by twenty, which is not expected to
exceed the current approved estimates.
3. This rule does not contain policies with federalism implications
as that term is defined in E.O. 13132.
4. Pursuant to section 1762 of ECRA (50 U.S.C. 4821), this action
is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553)
requirements for notice of proposed rulemaking, opportunity for public
participation, and delay in effective date. While section 1762 of ECRA
provides sufficient authority for such an exemption, this action is
also independently exempt from these APA requirements because it
involves a military or foreign affairs function of the United States (5
U.S.C. 553(a)(1)).
5. Because neither the Administrative Procedure Act nor any other
law requires that notice of proposed rulemaking and an opportunity for
public comment be given for this rule, the analytical requirements of
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not
applicable. Accordingly, no Final Regulatory Flexibility Analysis is
required and none has been prepared.
List of Subjects
15 CFR Part 740
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, parts 740, 744 and 746 of
the Export Administration Regulations (15 CFR parts 730 through 774)
are amended as follows:
PART 740--LICENSE EXCEPTIONS
0
1. The authority citation for part 740 continues to read as follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR,
2001 Comp., p. 783.
Sec. 740.2 [Amended]
0
2. Section 740.2 is amended by removing and reserving paragraph
(a)(22).
PART 744--END-USE AND END-USER CONTROLS
0
3. The authority citation for 15 CFR part 744 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR,
1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p.
608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3
CFR, 1998 Comp., p. 208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp.,
p. 783; E.O. 13224, 66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice
of September 19, 2022, 87 FR 57569 (September 21, 202); Notice of
November 8, 2022, 87 FR 68015, 3 CFR, 2022 Comp., p. 563; Notice of
September 7, 2023, 88 FR 62439 (September 11, 2023).
0
4. Section 744.1 is amended by revising paragraph (a)(1) to read as
follows:
Sec. 744.1 General provisions.
(a)(1) Introduction. In this part, references to the EAR are
references to 15 CFR chapter VII, subchapter C. This part contains
prohibitions against exports, reexports, and selected transfers to
certain end users and end uses as introduced under General Prohibitions
Five (End use/End users) and Nine (Orders, Terms, and Conditions),
unless authorized by BIS. Sections 744.2, 744.3, and 744.4 prohibit
exports, reexports, and transfers (in-country) of items subject to the
EAR to defined nuclear, missile, and chemical and biological weapons
proliferation activities. Section 744.5 prohibits exports, reexports,
and transfers (in-country) of items subject to the EAR to defined
nuclear maritime end-uses. Consistent with General Prohibition Seven
(Support of Proliferation Activities and certain Military-Intelligence
End Uses and End Users (``U.S. person'' activities)), Sec. 744.6
prohibits specific activities by U.S. persons in support of certain
nuclear, missile, chemical and biological weapons end uses, and whole
plants for chemical weapons precursors, as well as certain military-
intelligence end uses and military-intelligence end users. Section
744.7 prohibits exports, reexports, and transfers (in-country) of
certain items for certain aircraft and
[[Page 20115]]
vessels. Section 744.8 prohibits exports, reexports, and transfers (in-
country) without authorization when a person designated on the list of
Specially Designated Nationals and Blocked Persons (SDN List) pursuant
to certain specified sanctions programs is a party to the transaction.
Section 744.9 sets forth restrictions on exports, reexports, and
transfers (in-country) of certain cameras, systems, or related
components. Section 744.11 imposes license requirements, to the extent
specified in supplement no. 4 to this part, on entities listed in
supplement no. 4 to this part for activities contrary to the national
security or foreign policy interests of the United States. Section
744.15 sets forth the conditions for exports, reexports, and transfers
(in-country) to persons listed on the Unverified List (UVL) in
supplement no. 6 to this part, the criteria for revising the UVL, as
well as procedures for requesting removal or modification of a listing
on the UVL. Section 744.16 sets forth the license requirements,
policies and procedures for the Entity List. Section 744.17 sets forth
restrictions on exports, reexports, and transfers (in-country) of
microprocessors and associated ``software'' and ``technology'' for
military end uses and to military end users. Section 744.19 sets forth
BIS's licensing policy for applications for export, reexport, and
transfer (in-country) when a party to the transaction is an entity that
has been sanctioned pursuant to any of three specified statutes that
require certain license applications to be denied. In addition, these
sections include license review standards for export, reexport, and in-
country transfer license applications submitted as required by these
sections. It should also be noted that part 764 of the EAR prohibits
exports, reexports, and certain transfers of items subject to the EAR
to denied parties. Section 744.21 imposes restrictions for exports,
reexports, and transfers (in-country) of item subject to the EAR listed
in supplement no. 2 to this part for a military end use or military end
user in Burma, Cambodia, the People's Republic of China (PRC or China),
Nicaragua, or Venezuela and for a Burmese, Cambodian, Chinese,
Nicaraguan, or Venezuelan military end user if identified in supplement
no. 7 to this part. Section 744.21 also imposes restrictions for
exports, reexports, and transfers (in-country) for all items subject to
the EAR for a military end use or military end user in Belarus or
Russia and for a Belarusian or Russian military end user wherever
located if identified on supplement no. 4 to this part. Section 744.22
imposes restrictions on exports, reexports, and transfers (in-country)
for a military-intelligence end use or military-intelligence end user
in Burma, China, Russia, or Venezuela; or for a country listed in
Country Groups E:1 or E:2 (see supplement no. 1 to part 740 of the
EAR). Section 744.23 sets forth restrictions on exports, reexports, and
transfers (in-country) for certain ``supercomputer'' and semiconductor
manufacturing end use.
* * * * *
0
5. Section 744.7 is amended by revising the paragraph (b)(2) heading to
read as follows:
Sec. 744.7 Restrictions on certain exports to and for the use of
certain foreign vessels or aircraft.
* * * * *
(b) * * *
(2) Exports, reexports, and transfers (in-country) to U.S. or
Canadian Airline's Installation or Agent. * * *
* * * * *
0
6. Section 744.8 is revised to read as follows:
Sec. 744.8 Restrictions on exports, reexports, and transfers (in-
country) when certain persons designated on the list of Specially
Designated Nationals and Blocked Persons (SDN List) are a party to the
transaction.
(a) Scope. (1) In addition to any other EAR license requirements
that may be applicable, this section imposes EAR license requirements,
license review policies, and restrictions on the use of license
exceptions for exports, reexports, and transfers (in-country) when a
person who is designated on the Department of the Treasury, Office of
Foreign Assets Control's (OFAC) List of Specially Designated Nationals
and Blocked Persons (SDN List) with any of the following identifiers is
a party to the transaction, as described in Sec. 748.5(c) through (f):
(i) Related to Russia's invasion of Ukraine.
(A) [BELARUS-EO14038];
(B) [BELARUS];
(C) [RUSSIA-EO14024];
(D) [UKRAINE-EO13660];
(E) [UKRAINE-EO13661];
(F) [UKRAINE-EO13662]; or
(G) [UKRAINE-EO13685].
(ii) Terrorism-related.
(A) [FTO]; or
(B) [SDGT].
(iii) WMD-related.
(A) [NPWMD].
(B) [Reserved]
(iv) Related to narcotics trafficking or other criminal networks.
(A) [ILLICIT DRUGS-EO14059];
(B) [SDNT];
(C) [SDNTK]; or
(D) [TCO].
Note 1 to paragraph (a)(1): The names of such designations are
published in the Federal Register and incorporated into the SDN
List, as set forth in appendix A to 31 CFR chapter V and on OFAC's
website at https://www.treas.gov/sdn. See Program Tag Definitions
for OFAC Sanctions Lists for additional information: https://ofac.treasury.gov/specially-designated-nationals-list-sdn-list/program-tag-definitions-for-ofac-sanctions-lists.
(2) These EAR controls supplement and strengthen the sanctions that
are imposed by OFAC on these SDNs to better ensure that U.S. national
security and foreign policy interests are protected. Specifically, this
section imposes controls on exports, reexports, or transfers (in-
country) of items subject to the EAR where the OFAC regulations are not
applicable, such as in certain situations involving deemed exports and
deemed reexports, and reexports and transfers (in-country) not
involving the U.S. financial system or otherwise involving U.S.
persons. To avoid imposing a duplicative license requirement, the
transactions specified in this section do not require separate EAR
authorization if the transactions are authorized under an OFAC specific
or general license or are exempted under OFAC's regulations.
Note 2 to paragraph (a): The Entity List in supplement no. 4 to
part 744 includes certain persons that have also been designated
with certain identifiers on the SDN List. See Sec. 744.11 and
supplement no. 4 to part 744 for requirements, including license
review policies, for these entities, which take precedence over the
requirements in this Sec. 744.8. BIS requires an EAR authorization
as specified in the license requirement column on the Entity List
for export, reexport, and transfer (in-country) transactions
involving items subject to the EAR in which these persons are
parties to the transaction regardless of whether such transaction is
authorized under an OFAC specific or general license or exempted
under OFAC's regulations.
(b) License requirements. Unless the export, reexport, or transfer
(in-country) is authorized under an OFAC specific or general license or
exempted under OFAC's regulations, a license is required under the EAR
for the export, reexport, or transfer (in-country) of any item
``subject to the EAR'' when a person who is designated on OFAC's SDN
List with any of the identifiers set forth in paragraph (a)(1) is a
party to the transaction as described in Sec. 748.5(c) through (f). A
Department of Commerce license is not required for transactions
described in this paragraph (b) that would have otherwise met all of
the terms and conditions of an OFAC
[[Page 20116]]
general license if the transactions had been subject to OFAC
jurisdiction.
(c) License exceptions. No license exceptions may overcome the
license requirements in this section, except for entities that are also
listed on the Entity List in supplement no. 4 to part 744 that have
certain license exception eligibility, which is available to overcome
the license requirements of this section and supplement no. 4 to part
744 for that specific entity.
(d) License review policy. Applications for licenses required by
this section will be subject to a presumption of denial license review
policy, except when note 1 to paragraph (a)(1) of this section is
applicable and the license review policy specified on the Entity List
in supplement no. 4 to part 744 is different, in which case the license
review policy under the applicable Entity List entry for that person
would govern. You should consult OFAC regarding transactions subject to
licensing requirements under regulations maintained by OFAC.
(e) Violations. (1) Any export, reexport, or transfer (in-country)
by a U.S. person of any item subject to both the EAR and regulations
maintained by OFAC in situations in which a person identified in
paragraph (a)(1) is a party to the transaction as described in Sec.
748.5(c) through (f) that is not authorized by OFAC constitutes a
violation of the EAR. This paragraph does not apply to entities
identified under both this section and the Entity List in supplement
no. 4 to part 744. EAR violations involving entities identified under
both this section and the Entity List will be addressed pursuant to
Sec. Sec. 744.11 and 744.16.
(2) Any export, reexport, or transfer (in-country) of any item
subject to the EAR in which a person identified in paragraph (a)(1) is
a party to the transaction as described in Sec. 748.5(c) through (f)
and such transaction is not subject to regulations maintained by OFAC
and not authorized by BIS constitutes a violation of the EAR.
Note 3 to Sec. 744.8: This section does not implement,
construe, or limit the scope of any criminal statute, including but
not limited to 18 U.S.C. 2339B(a)(1) and 2339A, and does not excuse
any person from complying with any criminal statute, including but
not limited to 18 U.S.C. 2339B(a)(1) and 18 U.S.C. 2339A.
0
7. Sections 744.10, 744.12 through 744.14, 744.18, and 744.20 are
removed and reserved.
PART 746--EMBARGOES AND OTHER SPECIAL CONTROLS
0
8. The authority citation for 15 CFR part 746 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117
Stat. 559; 22 U.S.C. 2151 note; 22 U.S.C. 6004; 22 U.S.C. 7201 et
seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p.
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7,
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 8, 2023, 88 FR
30211 (May 10, 2023).
0
9. Section 746.10 is amended by:
0
a. Revising paragraph (a)(2);
0
b. Revising paragraph (a)(3) introductory text; and
0
c. Removing the final sentence of the paragraph (c) introductory text.
The revisions read as follows:
Sec. 746.10 `Luxury goods' sanctions against Russia and Belarus and
Russian and Belarusian oligarchs and malign actors.
(a) * * *
(2) Russian and Belarusian oligarch and malign actors. The license
requirements under this section for persons designated on OFAC's SDN
List with the identifier [BELARUS], [BELARUS-EO14038], [RUSSIA-E.O.
14024], [UKRAINE-EO13660], [UKRAINE-EO13661], [UKRAINE-EO13662], or
[UKRAINE-EO13685] were removed from this section on March 21, 2024,
because a broader license requirement for all items subject to the EAR
is required under Sec. 744.8 as of March 21, 2024, which includes all
`luxury goods' under supplement no. 5 to part 746 and any other item
subject to the EAR. See Sec. 744.8 of the EAR for license requirements
for persons designated on OFAC's SDN List with the identifier
[BELARUS], [BELARUS-EO14038], [RUSSIA-E.O. 14024], [UKRAINE-EO13660],
[UKRAINE-EO13661], [UKRAINE-EO13662], or [UKRAINE-EO13685].
(3) Exclusion from scope of U.S.-origin controlled content under
paragraph (a)(1) of this section. For purposes of determining U.S.-
origin controlled content under supplement no. 2 to part 734 of the EAR
when making a de minimis calculation for reexports and exports from
abroad to Russia or Belarus, the license requirements in paragraph
(a)(1) of this section are not used to determine controlled U.S.-origin
content in a foreign-made item, provided the criteria in paragraphs
(a)(3)(i) and (ii) of this section are met:
* * * * *
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2024-06067 Filed 3-20-24; 8:45 am]
BILLING CODE 3510-33-P
