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e-CFR data is current as of December 11, 2019

Title 31Subtitle BChapter V → Part 566


Title 31: Money and Finance: Treasury


PART 566—HIZBALLAH FINANCIAL SANCTIONS REGULATIONS


Contents

Subpart A—Relation of This Part to Other Laws and Regulations

§566.101   Relation of this part to other laws and regulations.

Subpart B—Prohibitions

§566.201   Prohibitions or strict conditions with respect to correspondent or payable-through accounts of certain foreign financial institutions identified by the Secretary of the Treasury.
§566.202   Evasions; attempts; causing violations; conspiracies.
§566.203   Exempt transactions.

Subpart C—General Definitions

§566.300   Applicability of definitions.
§566.301   Agent.
§566.302   Correspondent account.
§566.303   Covered financial institution.
§566.304   Effective date.
§566.305   Entity.
§566.306   Financial institution.
§566.307   Financial services.
§566.308   Financial transaction.
§566.309   Foreign financial institution.
§566.310   HIFPA.
§566.311   Hizballah.
§566.312   Knowingly.
§566.313   Licenses; general and specific.
§566.314   Money laundering.
§566.315   OFAC.
§566.316   Payable-through account.
§566.317   Person.
§566.318   Transaction account.
§566.319   United States.
§566.320   U.S. financial institution.

Subpart D—Interpretations

§566.401   Reference to amended sections.
§566.402   Effect of amendment.
§566.403   Facilitation of certain efforts, activities, or transactions by foreign financial institutions.
§566.404   Significant transactions; significant financial services.

Subpart E—Licenses, Authorizations, and Statements of Licensing Policy

§566.501   General and specific licensing procedures.
§566.502   Effect of license or other authorization.
§566.503   Exclusion from licenses.
§566.504   Transactions related to closing a correspondent or payable-through account.

Subpart F—Reports

§566.601   Records and reports.

Subpart G—Penalties and Finding of Violation

§566.701   Penalties.
§566.702   Pre-Penalty Notice; settlement.
§566.703   Penalty imposition.
§566.704   Administrative collection; referral to United States Department of Justice.
§566.705   Finding of violation.

Subpart H—Procedures

§566.801   Procedures.
§566.802   Delegation by the Secretary of the Treasury.

Subpart I—Paperwork Reduction Act

§566.901   Paperwork Reduction Act notice.

Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Pub. L. 114-102, 129 Stat. 2205 (50 U.S.C. 1701 note); Pub. L. 115-272, 132 Stat. 4144 (50 U.S.C. 1701 note).

Source: 81 FR 22186, Apr. 15, 2016, unless otherwise noted.

Subpart A—Relation of This Part to Other Laws and Regulations

§566.101   Relation of this part to other laws and regulations.

This part is separate from, and independent of, the other parts of this chapter, with the exception of part 501 of this chapter, the recordkeeping and reporting requirements and license application and other procedures of which apply to this part. Actions taken pursuant to part 501 of this chapter with respect to the prohibitions contained in this part are considered actions taken pursuant to this part. Differing foreign policy and national security circumstances may result in differing interpretations of similar language among the parts of this chapter. No license or authorization contained in or issued pursuant to those other parts authorizes any transaction prohibited by this part. No license or authorization contained in or issued pursuant to any other provision of law or regulation authorizes any transaction prohibited by this part. No license or authorization contained in or issued pursuant to this part relieves the involved parties from complying with any other applicable laws or regulations.

Subpart B—Prohibitions

§566.201   Prohibitions or strict conditions with respect to correspondent or payable-through accounts of certain foreign financial institutions identified by the Secretary of the Treasury.

Upon a determination by the Secretary of the Treasury that a foreign financial institution knowingly engages in one or more of the activities described in paragraphs (a)(1) through (a)(4) of this section, the Secretary of the Treasury may, as set forth in paragraph (b) of this section, impose one or more strict conditions on the opening or maintaining of a correspondent account or a payable-through account in the United States for that foreign financial institution, or, as set forth in paragraph (c) of this section, prohibit a U.S. financial institution from opening or maintaining a correspondent account or a payable-through account in the United States for that foreign financial institution.

(a) A foreign financial institution engages in an activity described in this paragraph if, in any location or currency, the foreign financial institution, on or after December 18, 2015, knowingly:

(1) Facilitates a significant transaction or transactions for Hizballah;

(2) Facilitates a significant transaction or transactions of a person identified on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List), the property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) (IEEPA) for acting on behalf of or at the direction of, or being owned or controlled by, Hizballah;

Note to paragraph (a)(2): The SDN List is accessible through the following page on OFAC's Web site: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in appendix A to this chapter. Persons whose property and interests in property are blocked pursuant to IEEPA for acting on behalf of or at the direction of or being owned or controlled by Hizballah are identified by a special reference to Hizballah at the end of their entries on the SDN List, in addition to the reference to the regulatory part of this chapter pursuant to which their property and interests in property are blocked. For example, a person whose property and interests in property are blocked pursuant to the Global Terrorism Sanctions Regulations, 31 CFR part 594, and identified on the SDN List, will have the program tag “[SDGT]” and descriptive text [“Subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations”].

(3) Engages in money laundering to carry out an activity described in paragraphs (a)(1) or (a)(2) of this section; or

(4) Facilitates a significant transaction or transactions or provides significant financial services to carry out an activity described in paragraphs (a)(1), (a)(2), or (a)(3) of this section.

(b) The Secretary of the Treasury may impose one or more strict conditions on the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for a foreign financial institution that the Secretary finds engages in one or more of the activities described in paragraph (a) of this section. Except as otherwise authorized pursuant to this part, a U.S. financial institution shall not open or maintain a correspondent account or payable-through account in the United States in a manner that is inconsistent with any strict condition imposed and in effect pursuant to this paragraph. Such conditions may include the following:

(1) Prohibiting or restricting any provision of trade finance through the correspondent account or payable-through account of the foreign financial institution;

(2) Restricting the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution to certain types of transactions, such as personal remittances;

(3) Placing monetary limits on, or limiting the volume of, the transactions that may be processed through the correspondent account or payable-through account of the foreign financial institution;

(4) Requiring pre-approval from the U.S. financial institution for all transactions processed through the correspondent account or payable-through account of the foreign financial institution; or

(5) Prohibiting or restricting the processing of foreign exchange transactions through the correspondent account or payable-through account of the foreign financial institution.

Note to paragraph (b): The name of the foreign financial institution, together with the actual strict condition(s) to be imposed, will be added to the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List) on the Office of Foreign Assets Control's Web site (www.treasury.gov/ofac), and published in the Federal Register.

(c) If the Secretary of the Treasury does not impose one or more strict conditions, pursuant to paragraph (b) of this section, on the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for a foreign financial institution that the Secretary determines engages in one or more of the activities described in paragraph (a) of this section, the Secretary may prohibit the opening or maintaining by a U.S. financial institution of a correspondent account or a payable-through account in the United States for that foreign financial institution. Except as otherwise authorized pursuant to this part, a U.S. financial institution shall not open or maintain a correspondent account or a payable-through account in the United States for a foreign financial institution for which the opening or maintaining of such an account is prohibited pursuant to this paragraph.

Note to paragraph (c): The names of foreign financial institutions for which the opening or maintaining of a correspondent account or a payable-through account in the United States is prohibited will be listed on the CAPTA List on OFAC's Web site (www.treasury.gov/ofac), and published in the Federal Register.

[81 FR 22186, Apr. 15, 2016, as amended at 84 FR 9457, Mar. 15, 2019]

§566.202   Evasions; attempts; causing violations; conspiracies.

(a) Any transaction on or after the effective date that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this part is prohibited.

(b) Any conspiracy formed to violate any of the prohibitions set forth in this part is prohibited.

§566.203   Exempt transactions.

Sanctions will not be imposed under §566.201 with respect to:

(a) Any authorized intelligence, law enforcement, or national security activities of the United States.

(b) Any transaction necessary to comply with United States obligations under the Agreement between the United Nations and the United States of America regarding the Headquarters of the United States, signed at Lake Success June 26, 1947, and entered into force November 21, 1947, or the Convention on Consular Relations, done at Vienna April 24, 1963, and entered into force March 19, 1967, or any other United States international agreement.

[84 FR 35310, July 23, 2019]

Subpart C—General Definitions

§566.300   Applicability of definitions.

The definitions in this subpart apply throughout the entire part.

§566.301   Agent.

The term agent includes an entity established by a person for purposes of conducting transactions on behalf of the person in order to conceal the identity of the person.

§566.302   Correspondent account.

The term correspondent account means an account established to receive deposits from, make payments on behalf of, or handle other financial transactions related to a foreign financial institution.

§566.303   Covered financial institution.

The term covered financial institution means a broker or dealer in securities registered, or required to be registered, with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), except persons who register pursuant to section 15(b)(11) of the Securities Exchange Act of 1934; a futures commission merchant or an introducing broker registered, or required to be registered, with the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq.), except persons who register pursuant to section 4(f)(a)(2) of the Commodity Exchange Act; or a mutual fund.

§566.304   Effective date.

The effective date refers to the effective date of a prohibition or strict condition imposed pursuant to §566.201 on the opening or maintaining of a correspondent account or a payable-through account in the United States by a U.S. financial institution for a particular foreign financial institution and is the earlier of the date the U.S. financial institution receives actual or constructive notice of such prohibition or condition.

§566.305   Entity.

The term entity means a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization.

§566.306   Financial institution.

The term financial institution means:

(a) An insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h));

(b) A commercial bank or trust company;

(c) A private banker;

(d) An agency or branch of a foreign bank in the United States;

(e) Any credit union;

(f) A thrift institution;

(g) A broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.);

(h) A broker or dealer in securities or commodities;

(i) An investment banker or investment company;

(j) A currency exchange;

(k) An issuer, redeemer, or cashier of travelers' checks, checks, money orders, or similar instruments;

(l) An insurance company;

(m) A dealer in precious metals, stones, or jewels;

(n) A loan or finance company;

(o) A licensed sender of money or any other person who engages as a business in the transmission of funds including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system;

(p) A business engaged in vehicle sales, including automobile, airplane, and boat sales;

(q) Any business or agency which engages in any activity which the Secretary of the Treasury determines, by regulation, to be an activity which is similar to, related to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or

(r) Any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters.

§566.307   Financial services.

The term financial services includes loans, transfers, accounts, insurance, investments, securities, guarantees, foreign exchange, letters of credit, and commodity futures or options.

§566.308   Financial transaction.

The term financial transaction means any transfer of value involving a financial institution.

§566.309   Foreign financial institution.

(a) The term foreign financial institution means:

(1) A foreign bank;

(2) Any branch or office located outside the United States of a covered financial institution, as defined in §566.303;

(3) Any other person organized under foreign law (other than a branch or office of such person in the United States) that, if it were located in the United States, would be a covered financial institution, as defined in §566.303; and

(4) Any person organized under foreign law (other than a branch or office of such person in the United States) that is engaged in the business of, and is readily identifiable as, a dealer in foreign exchange or a money transmitter.

(b) For purposes of paragraph (a)(4) of this section, a person is not “engaged in the business” of a dealer in foreign exchange or a money transmitter if such transactions are merely incidental to the person's business.

[81 FR 22186, Apr. 15, 2016, as amended at 84 FR 35310, July 23, 2019]

§566.310   HIFPA.

The term HIFPA means the Hizballah International Financing Prevention Act of 2015, Public Law 114-102.

§566.311   Hizballah.

The term Hizballah means:

(a) The entity known as Hizballah and designated by the Secretary of State as a foreign terrorist organization pursuant to section 219 of the Immigration and Nationality Act (8 U.S.C. 1189); or

(b) Any person:

(1) The property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.); and

(2) Who is identified on the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by OFAC as an agent, instrumentality, or affiliate of Hizballah.

Note to §566.311: The SDN List is accessible through the following page on OFAC's Web site: www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in appendix A to this chapter. Persons on the SDN List that fall within the definition of Hizballah set forth in this section are identified by a special reference to Hizballah at the end of their entries on the SDN List, in addition to the reference to the regulatory part of this chapter pursuant to which their property and interests in property are blocked. For example, a person whose property and interests in property are blocked pursuant to the Global Terrorism Sanctions Regulations, 31 CFR part 594, and identified on the SDN List will have the program tag “[SDGT]” and descriptive text [“Subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations”].

§566.312   Knowingly.

The term knowingly, with respect to conduct, a circumstance, or a result, means that a person has actual knowledge, or should have known, of the conduct, the circumstance, or the result.

§566.313   Licenses; general and specific.

(a) Except as otherwise provided in this part, the term license means any license or authorization contained in or issued pursuant to this part.

(b) The term general license means any license or authorization the terms of which are set forth in subpart E of this part or made available on OFAC's Web site: www.treasury.gov/ofac.

(c) The term specific license means any license or authorization issued pursuant to this part but not set forth in subpart E of this part or made available on OFAC's Web site: www.treasury.gov/ofac.

Note to §566.313: See §501.801 of this chapter on licensing procedures.

§566.314   Money laundering.

The term money laundering includes the movement of illicit cash or cash equivalent proceeds into, out of, or through a country, or into, out of, or through a financial institution.

§566.315   OFAC.

The term OFAC means the Department of the Treasury's Office of Foreign Assets Control.

§566.316   Payable-through account.

The term payable-through account means an account, including a transaction account as defined in §566.317, opened at a depository institution by a foreign financial institution by means of which the foreign financial institution permits its customers to engage, either directly or through a subaccount, in banking activities usual in connection with the business of banking in the United States.

§566.317   Person.

The term person means an individual or entity.

§566.318   Transaction account.

The term transaction account means a deposit or account on which the depositor or account holder is permitted to make withdrawals by negotiable or transferable instrument, payment orders of withdrawal, telephone transfers, or other similar items for the purpose of making payments or transfers to third persons or others. Such term includes demand deposits, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts.

§566.319   United States.

The term United States means the United States, its territories and possessions, and all areas under the jurisdiction or authority thereof.

§566.320   U.S. financial institution.

The term U.S. financial institution means a financial institution located in or organized under the laws of the United States or any jurisdiction within the United States.

Subpart D—Interpretations

§566.401   Reference to amended sections.

Except as otherwise provided in this part, reference to any provision in or appendix to this part or chapter or to any regulation, ruling, order, instruction, directive, or license issued pursuant to this part refers to the same as currently amended.

§566.402   Effect of amendment.

Unless otherwise specifically provided, any amendment, modification, or revocation of any provision in or appendix to this part or chapter or of any regulations, ruling, order, instruction, or license issued by OFAC does not affect any act done or omitted, or any civil or criminal proceeding commenced or pending, prior to such amendment, modification, or revocation. All penalties, forfeitures, and liabilities under any such regulation, ruling, order, instruction, or license continue and may be enforced as if such amendment, modification, or revocation had not been made.

§566.403   Facilitation of certain efforts, activities, or transactions by foreign financial institutions.

For purposes of §566.201, the term facilitate used with respect to certain efforts, activities, or transactions refers to the provision of assistance by a foreign financial institution for those efforts, activities, or transactions, including the provision of currency, financial instruments, securities, or any other transmission of value; purchasing; selling; transporting; swapping; brokering; financing; approving; guaranteeing; the provision of other services of any kind; the provision of personnel; or the provision of software, technology, or goods of any kind.

§566.404   Significant transactions; significant financial services.

In determining, for purposes of paragraph (a) of §566.201, whether a transaction(s) or financial service(s) is significant, the Secretary of the Treasury may consider the totality of the facts and circumstances. As a general matter, the Secretary may consider some or all of the following factors:

(a) Size, number, and frequency. The size, number, and frequency of transaction(s) or financial service(s) performed over a period of time, including whether the transaction(s) or financial service(s) is increasing or decreasing over time and the rate of increase or decrease.

(b) Nature. The nature of the transaction(s) or financial service(s), including the type, complexity, and commercial purpose of the transaction(s) or financial service(s).

(c) Level of awareness; pattern of conduct. (1) Whether the transaction(s) or financial service(s) is performed with the involvement or approval of management or only by clerical personnel; and

(2) Whether the transaction(s) or financial service(s) is part of a pattern of conduct or the result of a business development strategy.

(d) Nexus. The proximity between the foreign financial institution engaging in the transaction(s) or providing the financial service(s) and Hizballah or a blocked person described in paragraph (a)(2) of §566.201. For example, a transaction or financial service in which a foreign financial institution provides brokerage or clearing services to, or maintains an account or makes payments for, Hizballah or such a blocked person generally would be of greater significance than a transaction or financial service a foreign financial institution conducts for or provides to Hizballah or such a blocked person indirectly or in a tertiary relationship.

(e) Impact. The impact of the transaction(s) or financial service(s) on the objectives of the Hizballah International Financing Prevention Act of 2015, including:

(1) The economic or other benefit conferred or attempted to be conferred on Hizballah or a blocked person described in paragraph (a)(2) of §566.201; and

(2) Whether and how the transaction(s) or financial service(s) contributes to support for international terrorism.

(f) Deceptive practices. Whether the transaction(s) or financial service(s) involves an attempt to obscure or conceal the actual parties or true nature of the transaction(s) or financial service(s) to evade sanctions.

(g) Other relevant factors. Such other factors that the Secretary deems relevant on a case-by-case basis in determining the significance of a transaction(s) or financial service(s).

Subpart E—Licenses, Authorizations, and Statements of Licensing Policy

§566.501   General and specific licensing procedures.

For provisions relating to licensing procedures, see part 501, subpart E of this chapter. Licensing actions taken pursuant to part 501 of this chapter with respect to the prohibitions contained in this part are considered actions taken pursuant to this part. General licenses and statements of licensing policy relating to this part also may be available through the Counter Terrorism Sanctions page on OFAC's Web site: www.treasury.gov/ofac.

§566.502   Effect of license or other authorization.

(a) No license or other authorization contained in this part, or otherwise issued by OFAC, authorizes or validates any transaction or financial service effected prior to the issuance of such license or other authorization, unless specifically provided in such license or authorization.

(b) No regulation, ruling, instruction, or license authorizes any transaction or financial service prohibited under this part unless the regulation, ruling, instruction, or license is issued by OFAC and specifically refers to this part. No regulation, ruling, instruction, or license referring to this part shall be deemed to authorize any transaction or financial services prohibited by any other part of this chapter unless the regulation, ruling, instruction, or license specifically refers to such part.

(c) Any regulation, ruling, instruction, or license authorizing any transaction or financial service otherwise prohibited under this part has the effect of removing a prohibition contained in this part from the transaction, but only to the extent specifically stated by its terms. Unless the regulation, ruling, instruction, or license otherwise specifies, such an authorization does not create any right, duty, obligation, claim, or interest in, or with respect to, any property that would not otherwise exist under ordinary principles of law.

(d) Nothing contained in this part shall be construed to supersede the requirements established under any other provision of law or to relieve a person from any requirement to obtain a license or other authorization from another department or agency of the U.S. Government in compliance with applicable laws and regulations subject to the jurisdiction of that department or agency.

§566.503   Exclusion from licenses.

OFAC reserves the right to exclude any person, property, transaction, or class thereof from the operation of any license or from the privileges conferred by any license. OFAC also reserves the right to restrict the applicability of any license to particular persons, property, transactions, or classes thereof. Such actions are binding upon actual or constructive notice of the exclusions or restrictions.

§566.504   Transactions related to closing a correspondent or payable-through account.

(a) During the 10-day period beginning on the effective date of the prohibition in§566.201(c) on the opening or maintaining of a correspondent account or a payable-through account for a foreign financial institution listed on the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List), U.S. financial institutions that maintain correspondent accounts or payable-through accounts for the foreign financial institution are authorized to:

(1) Process only those transactions through the account, or permit the foreign financial institution to execute only those transactions through the account, that are for the purpose of, and necessary for, closing the account; and

(2) Transfer the funds remaining in the correspondent account or the payable-through account to an account of the foreign financial institution located outside of the United States and close the correspondent account or the payable-through account.

(b) A report must be filed with OFAC within 30 days of the closure of an account, providing full details on the closing of each correspondent account or payable-through account maintained by a U.S. financial institution for a foreign financial institution whose name is added to the CAPTA List, maintained on OFAC's Web site (www.treasury.gov/ofac) on the Hizballah Sanctions page. Such report must include complete information on the closing of the account and on all transactions processed or executed through the account pursuant to this section, including the account outside of the United States to which funds remaining in the account were transferred. Reports should be addressed to the attention of the Sanctions, Compliance & Evaluation Division, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., Freedman's Bank Building, Washington, DC 20220.

(c) Specific licenses may be issued on a case-by-case basis to authorize transactions outside the scope or time period authorized in paragraph (a) by a U.S. financial institution with respect to a correspondent account or a payable-through account maintained by the U.S. financial institution for a foreign financial institution whose name is added to the CAPTA List. License applications should be filed in conformance with §501.801 of the Reporting, Procedures and Penalties Regulations, 31 CFR part 501.

(d) Nothing in this section authorizes the opening of a correspondent account or a payable-through account for a foreign financial institution whose name appears on the CAPTA List.

Note to §566.504: This section does not authorize a U.S. financial institution to unblock property or interests in property, or to engage in any transaction or dealing in property or interests in property, blocked pursuant to any other part of this chapter, in the process of closing a correspondent account or a payable-through account for a foreign financial institution whose name has been added to the CAPTA List, maintained on OFAC's Web site (www.treasury.gov/ofac). See §566.101.

[81 FR 22186, Apr. 15, 2016, as amended at 84 FR 9457, Mar. 15, 2019]

Subpart F—Reports

§566.601   Records and reports.

For provisions relating to required records and reports, see part 501, subpart C, of this chapter. Recordkeeping and reporting requirements imposed by part 501 of this chapter with respect to the prohibitions contained in this part are considered requirements arising pursuant to this part.

Subpart G—Penalties and Finding of Violation

§566.701   Penalties.

(a) Civil penalties. As set forth in section 102(a)(3) of the Hizballah International Financing Prevention Act of 2015 (Pub. L. 114-102, 129 Stat. 2205 (50 U.S.C. 1701 note)), a civil penalty not to exceed the amount set forth in section 206(b) of the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1705(b)) may be imposed on any person who violates, attempts to violate, conspires to violate, or causes a violation of any license, order, regulation, or prohibition set forth in or issued pursuant to this part.

(b) The applicable maximum civil penalty per violation of IEEPA is the greater of $302,584 or an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed.

(c) Criminal penalties. As set forth in section 102(a)(3) of HIFPA, a person who willfully commits, willfully attempts to commit, or willfully conspires to commit a violation of any license, order, regulation, or prohibition set forth in or issued pursuant to this part shall, upon conviction, be fined not more than $1,000,000, or if a natural person, be imprisoned for not more than 20 years, or both.

(d) Adjustments to penalty amounts. (1) The civil penalties provided in IEEPA are subject to adjustment pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, as amended, 28 U.S.C. 2461 note).

(2) The criminal penalties provided in IEEPA are subject to adjustment pursuant to 18 U.S.C. 3571.

(e) Attention is also directed to 18 U.S.C. 1001, which provides that “whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact; or makes any materially false, fictitious, or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry” shall be fined under title 18, United States Code, imprisoned, or both.

(f) Violations of this part may also be subject to other applicable laws.

[81 FR 22186, Apr. 15, 2016, as amended at 81 FR 43076, July 1, 2016; 82 FR 10438, Feb. 10, 2017; 83 FR 11880, Mar. 19, 2018; 84 FR 27718, June 14, 2019]

§566.702   Pre-Penalty Notice; settlement.

(a) When required. If OFAC has reason to believe that there has occurred a violation of any provision of this part or a violation of the provisions of any license, ruling, regulation, order, directive, or instruction issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) and determines that a civil monetary penalty is warranted, OFAC will issue a Pre-Penalty Notice informing the alleged violator of the agency's intent to impose a monetary penalty. A Pre-Penalty Notice shall be in writing. The Pre-Penalty Notice may be issued whether or not another agency has taken any action with respect to the matter. For a description of the contents of a Pre-Penalty Notice, see appendix A to part 501 of this chapter.

(b)(1) Right to respond. An alleged violator has the right to respond to a Pre-Penalty Notice by making a written presentation to OFAC. For a description of the information that should be included in such a response, see appendix A to part 501 of this chapter.

(2) Deadline for response. A response to a Pre-Penalty Notice must be made within 30 days as set forth below. The failure to submit a response within 30 days shall be deemed to be a waiver of the right to respond.

(i) Computation of time for response. A response to a Pre-Penalty Notice must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to OFAC by courier) on or before the 30th day after the postmark date on the envelope in which the Pre-Penalty Notice was mailed. If the Pre-Penalty Notice was personally delivered by a non-U.S. Postal Service agent authorized by OFAC, a response must be postmarked or date-stamped on or before the 30th day after the date of delivery.

(ii) Extensions of time for response. If a due date falls on a federal holiday or weekend, that due date is extended to include the following business day. Any other extensions of time will be granted, at the discretion of OFAC, only upon specific request to OFAC.

(3) Form and method of response. A response to a Pre-Penalty Notice need not be in any particular form, but it must be typewritten and signed by the alleged violator or a representative thereof, must contain information sufficient to indicate that it is in response to the Pre-Penalty Notice, and must include the OFAC identification number listed on the Pre-Penalty Notice. A copy of the written response may be sent by facsimile, but the original also must be sent to OFAC's Enforcement Division by mail or courier and must be postmarked or date-stamped in accordance with paragraph (b)(2) of this section.

(c) Settlement. Settlement discussions may be initiated by OFAC, the alleged violator, or the alleged violator's authorized representative. For a description of practices with respect to settlement, see appendix A to part 501 of this chapter.

(d) Guidelines. Guidelines for the imposition or settlement of civil penalties by OFAC are contained in appendix A to part 501 of this chapter.

(e) Representation. A representative may act on behalf of the alleged violator, but any oral communication with OFAC prior to a written submission regarding the specific allegations contained in the Pre-Penalty Notice must be preceded by a written letter of representation, unless the PrePenalty Notice was served upon the alleged violator in care of the representative.

[81 FR 22186, Apr. 15, 2016, as amended at 84 FR 35310, July 23, 2019]

§566.703   Penalty imposition.

If, after considering any written response to the Pre-Penalty Notice and any relevant facts, OFAC determines that there was a violation by the alleged violator named in the Pre-Penalty Notice and that a civil monetary penalty is appropriate, OFAC may issue a Penalty Notice to the violator containing a determination of the violation and the imposition of the monetary penalty. For additional details concerning issuance of a Penalty Notice, see appendix A to part 501 of this chapter. The issuance of the Penalty Notice shall constitute final agency action. The violator has the right to seek judicial review of that final agency action in federal district court.

[84 FR 35310, July 23, 2019]

§566.704   Administrative collection; referral to United States Department of Justice.

In the event that the violator does not pay the penalty imposed pursuant to this part or make payment arrangements acceptable to OFAC, the matter may be referred for administrative collection measures by the Department of the Treasury or to the United States Department of Justice for appropriate action to recover the penalty in a civil suit in a federal district court.

§566.705   Finding of violation.

(a) When issued. (1) OFAC may issue an initial Finding of Violation that identifies a violation if OFAC:

(i) Determines that there has occurred a violation of any provision of this part, or a violation of the provisions of any license, ruling, regulation, order, directive, or instruction issued by or pursuant to the direction or authorization of the Secretary of the Treasury pursuant to this part or otherwise under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706);

(ii) Considers it important to document the occurrence of a violation; and,

(iii) Based on the Guidelines contained in appendix A to part 501 of this chapter, concludes that an administrative response is warranted but that a civil monetary penalty is not the most appropriate response.

(2) An initial Finding of Violation shall be in writing and may be issued whether or not another agency has taken any action with respect to the matter. For additional details concerning issuance of a Finding of Violation, see appendix A to part 501 of this chapter.

(b) Response—(1) Right to respond. An alleged violator has the right to contest an initial Finding of Violation by providing a written response to OFAC.

(2) Deadline for response; Default determination. A response to an initial Finding of Violation must be made within 30 days as set forth in paragraphs (b)(2)(i) and (ii) of this section. The failure to submit a response within 30 days shall be deemed to be a waiver of the right to respond, and the initial Finding of Violation will become final and will constitute final agency action. The violator has the right to seek judicial review of that final agency action in federal district court.

(i) Computation of time for response. A response to an initial Finding of Violation must be postmarked or date-stamped by the U.S. Postal Service (or foreign postal service, if mailed abroad) or courier service provider (if transmitted to OFAC by courier) on or before the 30th day after the postmark date on the envelope in which the initial Finding of Violation was served. If the initial Finding of Violation was personally delivered by a non-U.S. Postal Service agent authorized by OFAC, a response must be postmarked or date-stamped on or before the 30th day after the date of delivery.

(ii) Extensions of time for response. If a due date falls on a Federal holiday or weekend, that due date is extended to include the following business day. Any other extensions of time will be granted, at the discretion of OFAC, only upon specific request to OFAC.

(3) Form and method of response. A response to an initial Finding of Violation need not be in any particular form, but it must be typewritten and signed by the alleged violator or a representative thereof, contain information sufficient to indicate that it is in response to the initial Finding of Violation, and include the OFAC identification number listed on the initial Finding of Violation. A copy of the written response may be sent by facsimile, but the original also must be sent to OFAC by mail or courier and must be postmarked or date-stamped in accordance with paragraph (b)(2) of this section.

(4) Information that should be included in response. Any response should set forth in detail why the alleged violator either believes that the alleged violation did not occur and/or why a Finding of Violation is otherwise unwarranted under the circumstances, with reference to the General Factors Affecting Administrative Action set forth in the Guidelines contained in appendix A to part 501 of this chapter. The response should include all documentary or other evidence available to the alleged violator that supports the arguments set forth in the response. OFAC will consider all relevant materials submitted in the response.

(c) Determination—(1) Determination that a Finding of Violation is warranted. If, after considering the response, OFAC determines that a final Finding of Violation should be issued, OFAC will issue a final Finding of Violation that will inform the violator of its decision. A final Finding of Violation shall constitute final agency action. The violator has the right to seek judicial review of that final agency action in Federal district court.

(2) Determination that a Finding of Violation is not warranted. If, after considering the response, OFAC determines a Finding of Violation is not warranted, then OFAC will inform the alleged violator of its decision not to issue a final Finding of Violation.

Note 1 to paragraph (c)(2): A determination by OFAC that a final Finding of Violation is not warranted does not preclude OFAC from pursuing other enforcement actions consistent with the Guidelines contained in appendix A to part 501 of this chapter.

(d) Representation. A representative of the alleged violator may act on behalf of the alleged violator, but any oral communication with OFAC prior to a written submission regarding the specific alleged violations contained in the initial Finding of Violation must be preceded by a written letter of representation, unless the initial Finding of Violation was served upon the alleged violator in care of the representative.

[84 FR 35310, July 23, 2019]

Subpart H—Procedures

§566.801   Procedures.

For license application procedures and procedures relating to amendments, modifications, or revocations of licenses; administrative decisions; rulemaking; and requests for documents pursuant to the Freedom of Information and Privacy Acts (5 U.S.C. 552 and 552a), see part 501, subpart E, of this chapter.

§566.802   Delegation by the Secretary of the Treasury.

Any action that the Secretary of the Treasury is authorized to take pursuant to the Hizballah International Financing Prevention Act of 2015 (Pub. L. 114-102, 129 Stat. 2205 (50 U.S.C. 1701 note)) may be taken by the Director of OFAC or by any other person to whom the Secretary of the Treasury has delegated authority to so act.

Subpart I—Paperwork Reduction Act

§566.901   Paperwork Reduction Act notice.

For approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) of information collections relating to recordkeeping and reporting requirements, licensing procedures, and other procedures, see §501.901 of this chapter. The information collection in §566.504(b) has been approved by OMB and assigned control number 1505-0255. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

[84 FR 35310, July 23, 2019]

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