Reporting, Procedures and Penalties Regulations

Published date10 May 2024
Record Number2024-10033
Citation89 FR 40372
CourtForeign Assets Control Office,Treasury Department
SectionRules and Regulations
Federal Register, Volume 89 Issue 92 (Friday, May 10, 2024)
[Federal Register Volume 89, Number 92 (Friday, May 10, 2024)]
                [Rules and Regulations]
                [Pages 40372-40378]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2024-10033]
                =======================================================================
                -----------------------------------------------------------------------
                DEPARTMENT OF THE TREASURY
                Office of Foreign Assets Control
                31 CFR Part 501
                Reporting, Procedures and Penalties Regulations
                AGENCY: Office of Foreign Assets Control, Treasury.
                ACTION: Interim final rule; request for comments.
                -----------------------------------------------------------------------
                SUMMARY: The Department of the Treasury's Office of Foreign Assets
                Control (OFAC) is issuing this interim final rule to amend the
                Reporting, Procedures and Penalties Regulations (the ``Regulations''),
                to require electronic filing of certain submissions to OFAC and to
                describe and modify certain reporting requirements related to blocked
                property and rejected transactions. In particular, the rule would
                require use of the electronic OFAC Reporting System for submission of
                reports related to blocked property and rejected transactions, remove
                the mail option for certain other types of OFAC submissions, describe
                reports OFAC may require from financial institutions for transactions
                that meet specified criteria, and add a reporting requirement for any
                blocked property that is unblocked or transferred. Additionally, OFAC
                is clarifying the scope of the reporting requirement for rejected
                transactions, in part to respond to comments received on the interim
                final rule OFAC published on June 21, 2019 to amend the Regulations.
                Further, OFAC is modifying the procedures for requests relating to
                property that is blocked in error and updating the Regulations with
                respect to the availability of information under the Freedom of
                Information Act (FOIA) for certain categories of records. OFAC is also
                clarifying that persons may submit a petition for administrative
                reconsideration to seek removal of a person or property from the List
                of Specially Designated Nationals and Blocked Persons or any other list
                of sanctioned persons maintained by OFAC. OFAC is also adding a
                description of reports OFAC may require financial institutions to
                provide about transactions that meet specified criteria to aid in the
                identification of blocked property. Finally, OFAC is making several
                technical and conforming edits. OFAC is soliciting public comments for
                30 days on this interim final rule.
                DATES: This interim final rule is effective August 8, 2024. Written
                comments may be submitted on or before June 10, 2024.
                ADDRESSES: You may submit comments via the following methods,
                electronic is preferred:
                 Federal eRulemaking Portal: www.regulations.gov. Follow the
                instructions on the website for submitting comments. Refer to Docket
                Number OFAC-2024-0002.
                 Mail: Office of Foreign Assets Control, U.S. Department of the
                Treasury, Treasury Annex/Freedman's Bank Building, 1500 Pennsylvania
                Avenue NW, Washington, DC 20220. Refer to Docket Number OFAC-2024-0002.
                 Instructions: All submissions received must include the agency name
                and the Federal Register Doc. number that appears at the end of this
                document. All comments, including attachments and other supporting
                materials, will become part of the public record and subject to public
                disclosure. Sensitive personal information, such as account numbers or
                Social Security numbers, should not be included. Comments generally
                will not be edited to remove any identifying or contact information.
                FOR FURTHER INFORMATION CONTACT: Assistant Director for Licensing, 202-
                622-2480; Assistant Director for Regulatory Affairs, 202-622-4855;
                Assistant Director for Compliance, 202-622-2490.
                SUPPLEMENTARY INFORMATION:
                Background
                 The Regulations (31 CFR part 501), originally issued August 25,
                1997 (62 FR 45098), set forth standard reporting and recordkeeping
                requirements, license application procedures, and other procedures
                relevant to the economic sanctions programs administered by OFAC. As
                described further below, OFAC is providing updates within nine sections
                of the Regulations: Sec. Sec. 501.602, 501.603, 501.604, 501.605,
                501.801, 501.804, 501.805, 501.806, and 501.807.
                [[Page 40373]]
                Electronic Filing of Submissions
                 OFAC Reporting System for reports of blocked property and rejected
                transactions. This interim final rule would generally require filers to
                use the electronic OFAC Reporting System (ORS) for submission to OFAC
                of initial reports of blocked property and Annual Reports of Blocked
                Property pursuant to Sec. 501.603(d) and reports of rejected
                transactions pursuant to Sec. 501.604(d), beginning on August 8, 2024.
                Electronic submission of reports improves efficiencies in reporting and
                reviewing data, and thus reduces the overall burden on both filers and
                the U.S. government over the long term. Many filers currently use ORS,
                on a voluntary basis, to submit initial reports of blocked property,
                Annual Reports of Blocked Property, and reports of rejected
                transactions. OFAC encourages filers to become familiar with ORS and to
                submit reports using that system in advance of the August 8, 2024
                deadline. If a submitter can provide evidence of unique and
                extraordinary circumstances that would not permit the electronic filing
                of reports, such as lack of access to the internet, the submitter may
                request to submit reports in an alternative manner by calling 202-622-
                2490. Such requests will be subject to a presumption of denial and
                granted only in writing.
                 Email Submission of Other Reports. OFAC is amending several
                sections of the Regulations to require electronic submissions and to
                remove options for mail submission. OFAC is amending Sec.
                501.603(d)(2) to require electronic submission of reports of unblocked
                or transferred blocked property, as required pursuant to revised Sec.
                501.603(b)(3)(i). OFAC will accept such reports of unblocked or
                transferred blocked property pursuant to revised Sec. 501.603(b)(3)(i)
                via either email or ORS. OFAC is also amending Sec. 501.605(a) of the
                Regulations to require submission of the documentation and
                notifications required therein by email, given the time sensitivity of
                these reports, and to remove the options for submission by facsimile or
                mail. Finally, OFAC is requiring email submission or removing the
                options for mail submission in the following sections of the
                Regulations: Sec. Sec. 501.804, 501.805, 501.806, and 501.807.
                Electronic submission and use of OFAC's website will allow for more
                efficient receipt and processing of reports and requests from the
                public.
                Reports of Unblocked or Transferred Blocked Property
                 OFAC is revising Sec. 501.603(b)(3)(i) to require reports within
                10 business days of when blocked property is unblocked or transferred,
                including pursuant to a valid order issued by a U.S. government agency
                or U.S. court, as set out in that paragraph. This amendment will enable
                OFAC to ascertain the current status of blocked and unblocked property.
                Reports need not be submitted for credits of interest payments that
                would not be transfers of blocked property or debits to blocked
                accounts for normal service charges, in each case as authorized
                pursuant to OFAC sanctions. As noted above, filers must submit reports
                pursuant to this section electronically, either via email to
                [email protected] or via ORS. Additionally, in revised Sec.
                501.603(d)(1), OFAC is expanding the retention requirement previously
                in Sec. 501.603(b)(2)(iii) for Annual Reports of Blocked Property to
                extend to initial reports of blocked property.
                Reports of Rejected Transactions
                 OFAC is revising elements of Sec. 501.604 in response to public
                comments received on the June 21, 2019, interim final rule (84 FR
                29055), which expanded the scope of the reporting requirement for
                rejected transactions.
                 Clarifying the definition of ``transaction.'' Several commenters
                requested clarity on the scope and types of rejected transactions that
                need to be reported to OFAC by non-financial institutions. In response
                to these comments, OFAC is amending Sec. 501.604(a) to clarify the
                scope of the term ``transaction'' for purposes of that section by
                specifying that the term includes transactions related to securities,
                checks, or foreign exchange, as well as sales or purchases of goods or
                services, thereby clarifying that securities, checks, foreign exchange,
                and goods and services are not in and of themselves transactions, when
                not provided as part of a transaction.
                 Confirmation of the scope of the term ``U.S. persons.'' OFAC
                received several comments that requested clarity about whether the term
                ``U.S. persons,'' as used in Sec. 501.604, includes U.S. persons other
                than U.S. financial institutions. OFAC confirms that this reporting
                requirement applies to all U.S. persons, as identified in the relevant
                parts of this chapter (or in the case of part 515, persons subject to
                U.S. jurisdiction), not only U.S. financial institutions.
                 Clarifying information that must be reported for rejected
                transactions. Comments received by OFAC also noted that not all
                information required by OFAC may be readily available at the time a
                transaction is rejected, and, in many cases, it would be burdensome and
                sometimes impractical for filers to seek out additional information
                about transactions that they have already rejected. In light of these
                concerns, OFAC is amending Sec. 501.604(b) to clarify that the
                information required therein must be reported only to the extent the
                information is available to the filer at the time the transactions was
                rejected.
                 Additional responses to public comments. Many comments received by
                OFAC anticipated that the interim final rule would cause a large
                increase in the volume of rejected transaction reports from non-
                financial institutions, which the comments suggest would be overly
                burdensome for businesses to submit as well as for OFAC to review.
                Since the publication of the interim final rule, however, OFAC has not
                received a large number of reports of rejected transactions from non-
                financial institutions as compared to the number of such reports from
                financial institutions. OFAC does not expect the volume of reported
                rejected transactions to be overly burdensome for businesses,
                particularly given that OFAC is providing additional clarity on the
                scope of rejected transaction reporting through this rule.
                 Some commenters expressed concerns about the ability to identify
                all rejected transactions and provide all requested information in a
                timely manner without significant costs, particularly if this
                information was not already being gathered in the course of rejecting a
                transaction. As noted above, OFAC is amending the Regulations to
                require reporting of only the information that is available to the
                filer at the time the transaction is rejected. OFAC notes that many
                businesses already have systems to identify rejected transactions
                related to OFAC sanctions, so it would be less burdensome for those
                specific businesses to report those rejected transactions to OFAC.
                However, OFAC recognizes that there may have been an up-front increase
                in burden and costs for other businesses, such as some non-financial
                institutions, that did not already have such a system to identify
                rejected transactions in place.
                 OFAC received a few comments questioning the utility to OFAC of
                receiving rejected transaction reports, particularly from U.S. non-
                financial institutions. OFAC continues to believe that these reports
                are valuable to OFAC in supporting its mission, including to identify
                attempts by sanctioned persons
                [[Page 40374]]
                to utilize both financial and non-financial institutions to evade
                sanctions or further illicit activity.
                Compliance Release Requests for Property Blocked Due to Mistaken
                Identity or Other Similar Errors
                 OFAC is revising the procedures at Sec. 501.806 for requesting
                release of funds blocked due to ``mistaken identity'' to extend to a
                broader category of any property blocked due to ``typographical or
                similar errors leading to blocking.'' OFAC is also narrowing the
                procedures so they are available only to the person that mistakenly
                blocked the property. In these cases, the person that mistakenly
                blocked the property may request a ``Compliance Release'' from OFAC's
                Compliance Division. Others may continue to request unblocking of
                property through license applications submitted to OFAC's Licensing
                Division.
                Rules Regarding the Availability of Information
                 In Sec. Sec. 501.603(e), 501.604(e), and 501.801(b)(6), OFAC is
                updating the rules governing the availability of information under FOIA
                for certain categories of information that are submitted to OFAC
                pursuant to the Regulations, to clarify that such information will
                generally be protected from disclosure if OFAC determines that an
                exemption or exclusion under FOIA applies or the disclosure is
                otherwise prohibited by law.
                Procedures for Delisting
                 In Sec. 501.807, OFAC is clarifying that persons may submit a
                petition for administrative reconsideration to seek removal of a person
                or property from the List of Specially Designated Nationals and Blocked
                Persons (SDN List) or any other list of sanctioned persons maintained
                by OFAC, and making a technical update to the contact information,
                including to require submission by email.
                Instruction To Report Certain Transactions
                 OFAC is adding a note to Sec. 501.602 to describe reports OFAC may
                require financial institutions to provide about accounts or
                transactions that meet specified criteria to aid in the identification
                of blocked property. If OFAC has reason to believe an account or
                transaction (or class of transactions) may involve the property or
                interests in property of a blocked person, OFAC may instruct the
                financial to report transactions that meet specified criteria and to
                notify OFAC prior to processing such transactions. Upon review, OFAC
                may determine that a reported transaction involves the property or
                interests in property of a blocked person and may take further action.
                Other Technical and Conforming Changes
                 OFAC is updating the instructions in Sec. Sec. 501.603(b)(2)-(3),
                501.801(b)(2), and 501.806(d)(5) to request the relevant ORS
                identification numbers, when available, to support efficient processing
                of these reports. OFAC is making edits throughout Sec. Sec. 501.603,
                501.604, 501.801, and 501.805 to update the OFAC website links. OFAC is
                amending Sec. 501.804(b) to add contact information for OFAC. OFAC is
                also amending Sec. Sec. 501.603(a)(1) and 501.604 to make clear that
                the reporting requirements extend to persons subject to U.S.
                jurisdiction in the case of the Cuban Assets Control Regulations, 31
                CFR part 515. Additionally, OFAC is amending Sec. 501.805(a) and (b)
                to make clear that OFAC records required by FOIA shall be made
                available in accordance with the provisions of the Regulations in
                addition to referenced provisions of 31 CFR part 1. OFAC is also
                amending Sec. 501.805(c) to add an OFAC website link to obtain forms
                and remove the mail, phone, and in person options.
                Electronic Availability
                 This document and additional information concerning OFAC are
                available on OFAC's website: https://ofac.treasury.gov.
                Public Participation
                 Because the amendment of the Regulations is a rule of agency
                procedure and involves a foreign affairs function, the provisions of
                Executive Order 12866 of September 30, 1993, ``Regulatory Planning and
                Review'' (58 FR 51735, October 4, 1993), as amended, and the
                Administrative Procedure Act (5 U.S.C. 553) requiring notice of
                proposed rulemaking, opportunity for public participation, and delay in
                effective date are inapplicable. Because no notice of proposed
                rulemaking is required for this rule, the Regulatory Flexibility Act (5
                U.S.C. 601-612) does not apply.
                Paperwork Reduction Act
                 Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507),
                the collections of information related to the Regulations have been
                previously approved by the Office of Management and Budget (OMB) under
                control number 1505-0164. This interim final rule modifies the
                requirements for certain of the collections of information under the
                Regulations, such as requiring use of electronic submission for certain
                reports and clarifying the scope of certain reporting requirements.
                Specifically, in Sec. Sec. 501.603 and 501.604, the rule would mandate
                the use of electronic filing via ORS for initial reports of blocked
                property and reports of rejected transactions, as well as Annual
                Reports of Blocked Property, in order to improve efficiencies for both
                filers and the U.S. government. In addition, OFAC is revising Sec.
                501.603(b)(3)(i) to require reports not only when blocked property is
                unblocked, but also when it is transferred, such as pursuant to a valid
                order from a U.S. government agency or U.S. court, as further set out
                in that paragraph. In Sec. 501.604, OFAC is clarifying the scope of
                rejected transactions and associated information that must be reported
                to reduce unnecessary burdens on filers. Additionally, the rule will
                amend Sec. 501.605(a) of the Regulations to allow for only electronic
                submission of the documentation and notifications required therein,
                given the time sensitivity of these reports, and to remove the options
                for submission by facsimile or mail. The rule will also remove the
                options for mail submission or require email submission in the
                following sections of the Regulations: Sec. Sec. 501.804, 501.805,
                501.806, and 501.807. OFAC is making other technical and conforming
                edits in the rule to increase the presence of websites and use
                electronic reporting, such as in Sec. Sec. 501.603, 501.604, and
                501.801 to update the OFAC website links. Finally, OFAC is amending
                Sec. 501.805(c) to add an OFAC website link to obtain forms.
                 These modifications to the collections of information under the
                Regulations have been submitted to OMB for review and approval under
                control number 1505-0164. Written comments and recommendations for the
                modified collection can be submitted by visiting www.reginfo.gov/public/do/PRAMain. Find this document by selecting ``Currently Under
                Review--Open for Public Comments'' or by using the search function.
                Comments are welcome and must be received by June 10, 2024.
                 An agency may not conduct or sponsor, and a person is not required
                to respond to, a collection of information unless the collection of
                information displays a valid control number.
                 The likely filers and record-keepers affected by these collections
                of information contained in 31 CFR part 501 are financial institutions,
                business organizations, nonprofit organizations, individuals, and legal
                representatives.
                 Since OFAC's last filing in June 2021, OFAC has reviewed the data
                on
                [[Page 40375]]
                reporting received and processed between April 4, 2022, and April 4,
                2023, to estimate the reporting burden, as set forth below. Given the
                number and type of reports received and processed during this period,
                the overall burden of the recordkeeping requirement imposed by Sec.
                501.601 is estimated to increase, largely due to the imposition of a
                broad range of sanctions in response to Russia's unjustified and
                unprovoked invasion of Ukraine in February 2022, which has led to a
                large influx of related reporting.
                 Additionally, the new electronic reporting mandate for some reports
                may impose initial costs on businesses that do not already file such
                reports electronically. OFAC is taking into account this potential
                initial increase in burden and cost for some parts of the private
                sector in its updated Supporting Statement related to this regulatory
                amendment. However, in the long term, OFAC expects the use of
                electronic reporting via ORS to reduce the overall time, cost, and
                burden of reporting for filers. OFAC estimates that, during the first
                three months of 2023, less than 1% (estimated 0.03%) of reports for
                blocked property or rejected transactions were submitted to OFAC using
                non-electronic methods, while approximately 96% of reports were
                submitted electronically via ORS, and approximately 3% of reports were
                submitted electronically to OFAC via email. In its updated Supporting
                Statement related to this regulatory amendment, OFAC is taking into
                account a potential small initial increase in burden and cost for the
                small number of filers (an estimated 3%) who would need to transition
                from filing reports via traditional mail service or via email to the
                new ORS electronic system. Overall, OFAC estimates that there should be
                a minimal overall burden in mandating electronic submission via ORS
                because nearly all filers currently send reports to OFAC via ORS.
                 The total burden for this collection is estimated to be:
                 Estimated Number of Respondents: 136,784.
                 Frequency of Response: On occasion.
                 Estimated Total Number of Annual Responses: 136,784.
                 Estimated Time per Response: Varies by form from 15 minutes to 5
                hours.
                 Estimated Total Annual Burden Hours: 44,220.
                 Comments are invited on: (a) Whether the 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 or other forms of information
                technology; and (e) estimates of capital or start-up costs and costs of
                operation, maintenance, and purchase of services required to provide
                information.
                List of Subjects in 31 CFR Part 501
                 Administrative practice and procedure, Banks, Banking, Exports,
                Foreign trade, Licensing and registration, Penalties, Reporting and
                recordkeeping requirements.
                 For the reasons set forth in the preamble, OFAC amends 31 CFR part
                501 as follows:
                PART 501--REPORTING, PROCEDURES AND PENALTIES REGULATIONS
                0
                1. The authority citation for part 501 continues to read as follows:
                 Authority: 8 U.S.C. 1189; 18 U.S.C. 2332d, 2339B; 19 U.S.C.
                3901-3913; 21 U.S.C. 1901-1908; 22 U.S.C. 287c, 2370(a), 6009, 6032,
                7205, 8501-8551; 31 U.S.C. 321(b); 50 U.S.C. 1701-1706, 4301-4341;
                Pub. L. 101-410, 104 Stat. 890, as amended (28 U.S.C. 2461 note).
                0
                2. Amend Sec. 501.602 by redesignating Note 1 to Sec. 501.602 as Note
                2 to Sec. 501.602 and adding new Note 1 to Sec. 501.602 to read as
                follows:
                Sec. 501.602 Reports to be furnished on demand.
                * * * * *
                 Note 1 to Sec. 501.602. If OFAC has reason to believe an
                account or transaction (or class of transactions) may involve the
                property or interests in property of a blocked person, OFAC may
                issue an instruction to one or more financial institutions that: (1)
                provides information or criteria to aid in the identification of
                blocked property; and (2) requires the financial institution to
                report transactions that meet the specified criteria and notify OFAC
                prior to processing such transactions. Upon review, OFAC may
                determine that a reported transaction involves the property or
                interests in property of a blocked person and take further action.
                * * * * *
                0
                3. Amend Sec. 501.603 by:
                0
                a. Revising the section heading;
                0
                b. Revising and republishing paragraph (a);
                0
                c. Redesignating paragraphs (b)(1)(ii)(G) and (H) as paragraphs
                (b)(1)(ii)(H) and (I), respectively, adding new paragraph
                (b)(1)(ii)(G), and revising newly redesignated paragraph (b)(1)(ii)(H);
                0
                d. In paragraph (b)(2)(ii)(F), remove the ``and'' at the end of the
                paragraph;
                0
                e. Revising (b)(2)(ii)(G);
                0
                f. Adding a new paragraph (b)(2)(ii)(H);
                0
                g. Removing paragraph (b)(2)(iii);
                0
                h. Revising the paragraph heading to paragraph (b)(3);
                0
                i. Revising paragraph (b)(3)(i);
                0
                j. In paragraph (b)(3)(ii)(A), add ``or transfer'' after
                ``unblocking'';
                0
                k. Revising paragraphs (b)(3)(ii)(F) and (b)(3)(ii)(G);
                0
                l. Adding Note 1 to paragraph (b)(3); and
                0
                m. Revising and republishing paragraphs (d) and (e).
                 The revisions, republications, and additions to read as follows:
                Sec. 501.603 Reports of blocked, unblocked, or transferred blocked
                property.
                 (a) Who must report--(1) Persons holding, unblocking, or
                transferring blocked property. Any U.S. person (or person subject to
                U.S. jurisdiction in the case of part 515 of this chapter), including a
                financial institution, holding, unblocking, or transferring property
                blocked pursuant to this chapter shall submit the relevant reports
                described in this section to the Office of Foreign Assets Control
                (OFAC). This requirement applies to all U.S. persons (or persons
                subject to U.S. jurisdiction in the case of part 515 of this chapter),
                who have in their possession or control any property blocked pursuant
                to this chapter, including financial institutions that receive and
                block payments or transfers, or who have had in their possession or
                control such property that is unblocked or transferred, as set out in
                paragraph (b) of this section.
                 (2) Primary responsibility to report. A report may be filed on
                behalf of a person who holds, transfers, or releases blocked property
                by an attorney, agent, or other person. Primary responsibility for
                reporting, however, rests with the actual holder, transferrer, or
                releaser of the property, or the person exercising control over
                property located outside the United States, with the following
                exceptions: primary responsibility for reporting any trust assets rests
                with the trustee; and primary responsibility for reporting real
                property rests with any U.S. co-owner, legal representative, agent, or
                property manager in the United States. No person is excused from filing
                a report by reason of the fact that another person has submitted a
                report with regard to the same property, except upon actual knowledge
                of the report filed by such other person.
                 (3) Financial institution. For purposes of this section, the term
                ``financial institution'' includes a banking institution, domestic
                bank, United States depository institution, financial
                [[Page 40376]]
                institution, or U.S. financial institution, as those terms are defined
                in the applicable part of this chapter.
                 (b) * * *
                 (1) * * *
                 (ii) * * *
                 (G) Any action taken with respect to the property (e.g., depositing
                the property into a new or existing blocked, interest-bearing account
                that is labeled as such and is established in the name of, or contains
                a means of clearly identifying the interest of, the person subject to
                blocking pursuant to the requirements of this chapter);
                 (H) The legal authority or authorities under which the property is
                blocked. This may include a reference to the sanctions program (current
                programs are on OFAC's website: https://ofac.treasury.gov), the
                applicable part of this chapter (e.g., 31 CFR part 515, 31 CFR part
                544), an Executive order (E.O.) (e.g., E.O. 13224, E.O. 13599), or a
                statute (e.g., Foreign Narcotics Kingpin Designation Act). (Note: For
                this purpose, the term ``SDN'' is generic and cannot be used to
                identify the legal authority for blocking property); and
                 (2) * * *
                 (ii) * * *
                 (G) The legal authority or authorities under which the property is
                blocked. This may include a reference to the sanctions program (current
                programs are listed here: https://ofac.treasury.gov), the applicable
                part of this chapter (e.g., 31 CFR part 515, 31 CFR part 544), an
                Executive order (E.O.) (e.g., E.O. 13224, E.O. 13599), or a statute
                (e.g., Foreign Narcotics Kingpin Designation Act). (Note: For this
                purpose, the term ``SDN'' is generic and cannot be used to identify the
                legal authority for blocking property); and
                 (H) The relevant OFAC Reporting System identification numbers, when
                available.
                 (3) Reports of blocked property that is unblocked or transferred--
                (i) When reports are due. Reports shall be submitted to OFAC within 10
                business days from the date blocked property is unblocked or
                transferred, except that if such reports are already required as a
                condition of a general or specific license, no additional report is
                required to be submitted under this section. For example, such reports
                must be filed when blocked property is unblocked or transferred
                pursuant to a valid order from a U.S. government agency or U.S. court,
                including pursuant to a valid judicial order issued pursuant to Section
                201(a) of the Terrorism Risk Insurance Act (Pub. L. 107-297, 116 Stat.
                2322, 28 U.S.C. 1610 note) or a valid order of forfeiture by any U.S.
                government agency or U.S. court. Reports do not need to be filed under
                this section for debits to blocked accounts for normal service charges
                authorized pursuant to OFAC sanctions.
                 (ii) * * *
                 (F) The legal authority or authorities under which the property was
                unblocked or transferred. This may include, for example, reference to a
                specific or general license under an applicable part of this chapter or
                an E.O.; and
                 (G) A copy of the original blocking report filed with OFAC pursuant
                to Sec. 501.603(b)(1) and the OFAC Reporting System report
                identification numbers, when available.
                 Note 3 to paragraph (b)(3). The reporting requirement set forth
                in this paragraph (b)(3) applies in addition to the reporting
                requirement set forth in Sec. 501.605 of this part, which requires
                litigants to notify OFAC of proceedings that may affect blocked
                property or retained funds.
                * * * * *
                 (d) How to report. (1) Except as otherwise provided, all initial
                reports of blocked property required under Sec. 501.603(b)(1) and the
                Annual Reports of Blocked Property required under Sec. 501.603(b)(2)
                must be filed electronically through the OFAC Reporting System (ORS),
                available on OFAC's website, https://ofac.treasury.gov/ofac-reporting-system. While blocked funds may be maintained in omnibus accounts, the
                Annual Reports of Blocked Property must contain a disaggregated list
                showing each blocked asset contained within the omnibus account. A copy
                of reports submitted pursuant to this section shall be retained for the
                submitter's records. If a submitter can provide evidence of unique and
                extraordinary circumstances that would not allow the submitter to use
                ORS, such as lack of access to the internet, the submitter may request
                to submit reports in an alternative manner by calling 202/622-2490.
                Such requests will be subject to a presumption of denial and granted
                only in writing.
                 (2) All reports of unblocked or transferred blocked property
                required pursuant to Sec. 501.603(b)(3) must be submitted
                electronically to OFAC via email at [email protected], with the
                number of this section in the subject line, or through ORS, available
                on OFAC's website, https://ofac.treasury.gov/ofac-reporting-system. If
                a submitter can provide evidence of unique and extraordinary
                circumstances that would not allow the submitter to report
                electronically, such as lack of access to the internet, the submitter
                may request to submit reports in an alternative manner by calling 202/
                622-2490. Such requests will be subject to a presumption of denial and
                granted only in writing.
                 (e) Rules governing availability of information. Information
                submitted to OFAC pursuant to this section will be protected from
                disclosure under the Freedom of Information Act (FOIA) (5 U.S.C. 552)
                and the provisions of 31 CFR part 1 if OFAC reasonably foresees that
                disclosure would harm an interest protected by a FOIA exemption or
                disclosure is prohibited by law. See 31 CFR 1.5 for additional
                provisions relating to confidential commercial information.
                0
                4. Amend Sec. 501.604 by:
                0
                a. Revising the section heading;
                0
                b. In paragraph (a)(1), add ``in the case of part 515 of this chapter''
                after ``(or a person subject to U.S. jurisdiction'';
                0
                c. Revising and republishing paragraph (a)(3);
                0
                d. Revising paragraph (b) introductory text;
                0
                e. In paragraph (b)(6), remove ``www.treasury.gov/resource-center/sanctions/SDN-List/Pages/program__tags.aspx'' and add in its place
                ``https://ofac.treasury.gov''; and
                0
                f. Revising and republishing paragraphs (d) and (e).
                 The revisions and republications to read as follows:
                Sec. 501.604 Reports of rejected transactions.
                 (a) * * *
                 (3) Transaction. The term transaction for purposes of this section
                includes wire transfers, trade finance, transactions related to
                securities, checks, or foreign exchange, and sales or purchases of
                goods or services.
                 (b) Required information to be reported. Reports of rejected
                transactions shall include the following information, to the extent the
                information is available to the person submitting the report at the
                time the transaction is rejected:
                * * * * *
                 (d) Where to report. Reports under this section shall be submitted
                to OFAC through the OFAC Reporting System, available on OFAC's website,
                https://ofac.treasury.gov/ofac-reporting-system. If a submitter can
                provide evidence of unique and extraordinary circumstances that would
                not allow the submitter to use ORS, such as lack of access to the
                internet, the submitter may request to submit reports in an alternative
                manner by calling 202/622-2490. Such requests will be subject to a
                presumption of denial and granted only in writing.
                 (e) Rules governing availability of information. Information
                submitted to OFAC pursuant to this section will be
                [[Page 40377]]
                protected from disclosure under the Freedom of Information Act (FOIA)
                (5 U.S.C. 552) and the provisions of 31 CFR part 1 if OFAC reasonably
                foresees that disclosure would harm an interest protected by a FOIA
                exemption or disclosure is prohibited by law. See 31 CFR 1.5 for
                additional provisions relating to confidential commercial information.
                0
                5. In Sec. 501.605, revise and republish paragraph (a) to read as
                follows:
                Sec. 501.605 Reports on litigation, arbitration, and dispute
                resolution proceedings.
                 (a) U.S. persons (or persons subject to U.S. jurisdiction in the
                case of part 515 of this chapter) participating in litigation,
                arbitration, or other binding alternative dispute resolution
                proceedings in the United States on behalf of or against persons whose
                property or interests in property are blocked or whose funds have been
                retained pursuant to Sec. 596.504(b) of this chapter, or when the
                outcome of any proceeding may affect blocked property or retained
                funds, must:
                 (1) Provide notice of such proceedings upon their commencement or
                upon submission or receipt of documents bringing the proceedings within
                the terms of the introductory text to this paragraph (a);
                 (2) Submit copies of all pleadings, motions, memoranda, exhibits,
                stipulations, correspondence, and proposed orders or judgments
                (including any proposed final judgment or default judgment) submitted
                to the court or other adjudicatory body, and all orders, decisions,
                opinions, or memoranda issued by the court, to the Office of the Chief
                Counsel (Foreign Assets Control) at [email protected] with the
                number of this section in the subject line, within 10 days of filing,
                submission, or issuance. This paragraph (a)(2) shall not apply to
                discovery requests or responses, documents filed under seal, or
                requests for procedural action not seeking action dispositive of the
                proceedings (such as requests for extension of time to file); and
                 (3) Report by email to the Office of the Chief Counsel (Foreign
                Assets Control), at [email protected] with the number of this
                section in the subject line, the scheduling of any hearing or status
                conference in the proceedings whenever it appears that the court or
                other adjudicatory body may issue an order or judgment in the
                proceedings (including a final judgment or default judgment) or is
                considering or may decide any pending request dispositive of the merits
                of the proceedings or of any claim raised in the proceedings.
                * * * * *
                0
                6. Amend Sec. 501.801 by:
                0
                a. In paragraph (a), revise the third sentence; ``
                0
                b. Revise paragraph (b)(2)(ii);
                0
                c. In paragraph (b)(5), remove ``by written correspondence'' and add in
                its place ``via the OFAC License Application Page at https://ofac.treasury.gov/ofac-license-application-page''; and
                0
                d. Revise paragraph (b)(6).
                 The revisions to read as follows:
                Sec. 501.801 Licensing
                 (a) * * * General licenses are set forth in subpart E of each part
                contained in this chapter, made available on OFAC's website (https://ofac.treasury.gov), or published in the Federal Register.* * *
                 (b) * * *
                 (2) * * *
                 (ii) Information to be supplied. The applicant must supply all
                information specified by relevant instructions (available on OFAC's
                Reporting and License Application Forms page at https://licensing.ofac.treas.gov) or forms, and must fully disclose the names
                of all parties who are concerned with or interested in the proposed
                transaction. If the application is filed by an agent, the agent must
                disclose the name of his or her principal(s). Such documents as may be
                relevant shall be attached to each application as a part of such
                application, whether filed electronically or by mail, except that
                documents previously filed with OFAC may, where appropriate, be
                incorporated by reference in such application. For applications for the
                release of blocked funds, applicants are encouraged to include, when
                available, the OFAC Reporting System (ORS) transaction and submission
                identification numbers. Applicants may be required to furnish such
                further information as is deemed necessary to assist OFAC in making a
                determination. Any applicant or other party in interest desiring to
                present additional information may do so at any time before or after
                OFAC makes its decision with respect to the application. Any requests
                to make such an oral presentation must be submitted via the OFAC
                License Application Page at https://ofac.treasury.gov/ofac-license-application-page to the attention of the Licensing Division,
                referencing the relevant Case ID number and a ``Request for Oral
                Presentation.'' Such requests are rarely granted.
                * * * * *
                 (6) Rules governing availability of information. Information
                submitted to OFAC pursuant to this section will be protected from
                disclosure under the Freedom of Information Act (FOIA) (5 U.S.C. 552)
                and the provisions of 31 CFR part 1 if OFAC reasonably foresees that
                disclosure would harm an interest protected by a FOIA exemption or
                disclosure is prohibited by law. See 31 CFR 1.5 for additional
                provisions relating to confidential commercial information.
                0
                7. In Sec. 501.804, revise paragraph (b) to read as follows:
                Sec. 501.804 Rulemaking.
                * * * * *
                 (b) Any interested person may petition the Office of Foreign Assets
                Control for the issuance, amendment, or repeal of any rule, including a
                general license, at [email protected] with the number of this
                section in the subject line.
                Sec. 501.805 [Amended]
                0
                8. Amend Sec. 501.805 by:
                0
                a. In paragraphs (a) and (b), after the phrase ``31 CFR part 1'' add
                the phrase ``, as well as the provisions of this part'' in both places
                it appears;
                0
                b. In paragraph (c), remove the phrase ``in person or by writing to the
                Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
                Pennsylvania Avenue NW--Annex, Washington, DC 20220, or by calling 202/
                622-2480'' with the phrase ``on OFAC's website (https://ofac.treasury.gov).''; and
                0
                c. In paragraph (d)(2), remove the reference ``http://www.treas.gov/ofac'' and add in its place the reference ``https://ofac.treasury.gov''.
                0
                9. Revise and republish Sec. 501.806 to read as follows:
                Sec. 501.806 Procedures for unblocking property believed to have been
                blocked and reported in error due to mistaken identity or typographical
                or similar errors.
                 When a party believes it has blocked property pursuant to the
                applicable regulations of this chapter due to mistaken identity or
                typographical or similar errors, such party may seek to have such
                property unblocked pursuant to the following administrative procedures:
                 (a) Any person who has blocked and reported to the Office of
                Foreign Assets Control (OFAC) property pursuant to Sec. 501.603 may
                submit a request for authorization to release blocked property that was
                blocked in error due to mistaken identity or typographical or similar
                error.
                [[Page 40378]]
                 (b) Requests to release such property must be sent via email to
                [email protected] and include the phrase ``31 CFR 501.806--
                Request for a Compliance Release'' in the subject line of the email.
                 (c) A request to release property must include the name, address,
                telephone number, and email address of the person seeking the release
                of the property.
                 (d) A request to release property should include the following
                information, where known, concerning the blocked property:
                 (1) The name of the person that holds the blocked property or filed
                the initial report of blocked property;
                 (2) The actual value, or if unknown, estimated value, in U.S.
                dollars of the blocked property, as included in the initial report of
                blocked property;
                 (3) The date of the blocking included in the initial report of
                blocked property;
                 (4) A copy of a valid government-issued identification document,
                social security number or employer identification number for a person
                whose property is believed to have been blocked in error, when
                applicable;
                 (5) The OFAC Reporting System (ORS) identification numbers
                associated with the initial report of blocked property filed with OFAC,
                when available;
                 (6) A description of the property or underlying transaction; and
                 (7) A narrative description of the reasons why the applicant
                believes the property was blocked in error.
                 (e) Upon receipt of the materials required by paragraph (d) of this
                section, OFAC may request additional material, if available, from the
                applicant concerning the blocked property pursuant to Sec. 501.602.
                 (f) Following review of all applicable submissions, OFAC will
                determine whether the property should be released. In the event that
                OFAC determines that the property should be released, it will direct
                the person to release the property to the appropriate party.
                0
                10. Revise and republish Sec. 501.807 to read as follows:
                Sec. 501.807 Procedures governing delisting from the Specially
                Designated Nationals and Blocked Persons List or any other list of
                sanctioned persons or property maintained by the Office of Foreign
                Assets Control.
                 A person may submit a petition for administrative reconsideration
                pursuant to the procedures outlined below in order to seek removal of a
                person or property (e.g., a vessel) from the List of Specially
                Designated Nationals and Blocked Persons (SDN List) or any other list
                or identification of sanctioned persons or property maintained by the
                Office of Foreign Assets Control (OFAC):
                 (a) A person blocked under the provisions of any part of this
                chapter, including a specially designated national, specially
                designated terrorist, specially designated narcotics trafficker, or a
                person otherwise subject to sanctions pursuant to the provisions of any
                part of this chapter (each, a ``sanctioned person''), or a person
                owning a majority interest in property (e.g., a vessel) that is blocked
                or otherwise subject to sanctions may submit arguments or evidence that
                the person believes establishes that insufficient basis exists for the
                sanction or that the circumstances resulting in the sanction no longer
                apply. The sanctioned person also may propose remedial steps on the
                person's part, such as corporate reorganization, resignation of persons
                from positions in a blocked entity, or similar steps, which the person
                believes would negate the basis for the sanction. A person owning a
                majority interest in property (e.g., a vessel) that is blocked or
                otherwise subject to sanctions may propose the sale of the vessel, with
                the proceeds to be placed into a blocked interest-bearing account after
                deducting the costs incurred while the vessel was blocked and the costs
                of the sale. This submission must be made via email to
                [email protected].
                 (b) For purposes of reconsideration petitions relating to persons
                or property sanctioned by OFAC:
                 (1) The information submitted by the person seeking removal of a
                person or property from the SDN List or any other list or
                identification of sanctioned persons or property maintained by OFAC
                will be reviewed by OFAC, which may request clarifying, corroborating,
                or other additional information.
                 (2) A person seeking removal of a person or property from the SDN
                List or any other list or identification of sanctioned persons or
                property maintained by OFAC may request a meeting with OFAC; however,
                such meetings are not required, and the office may, at its discretion,
                decline to conduct such meetings prior to completing a review pursuant
                to this section.
                 (3) After OFAC has conducted a review of the request for
                reconsideration, it will provide a written decision to the person
                seeking the removal of a person or property from the SDN List or any
                other list or identification of sanctioned persons or property
                maintained by OFAC.
                Bradley T. Smith,
                Director, Office of Foreign Assets Control.
                [FR Doc. 2024-10033 Filed 5-8-24; 8:45 am]
                BILLING CODE 4810-AL-P
                

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT