OFAC Final Rule Amends the Sudanese Sanctions Regulations & the Reporting, Procedures, and Penalties Regulations

OFAC's final rule also revises the Reporting, Procedures and Penalties Regulations (RPPR) to remove a reference to the Government of Sudan that was used prior to the promulgation of Executive Order (EO) 13067 and the SSR, which implemented EO 13067. (See ITT's 11/06/97 news, (Ref:97110555), for BP summary of EO 13067, which imposed comprehensive economic sanctions on Sudan.)

Highlights of the Final Rule's Amendments to the SSR and RPPR

The following are highlights of the amendments made to the SSR and RPPR by OFAC's final rule:

Changes to SSR civil penalty procedures. The final rule makes various amendments to 31 CFR 538.701 - .704 of the SSR to reflect changes in OFAC's procedure for imposing or settling civil penalties. OFAC explains that these regulations set forth the procedure by which civil penalties will be issued or settled, as well as guidelines for responding to a prepenalty notice. Among other changes, regulations concerning the failure to respond to prepenalty notices, guidelines for imposing civil penalties, and representation of the respondent are also added. However, OFAC notes that these amendments do not affect the maximum penalty amounts authorized by the SSR.

Re-exports of certain U.S.-origin items by non-U.S. persons. The final rule also revises 31 CFR 538.507 (Re-exports by non-U.S. persons) of the SSR to clarify the circumstances under which the reexportation of goods, technology, or software of U.S.-origin to Sudan or the Government of Sudan by a non-U.S. person is authorized.

Prohibition of money transmittal services to Sudan (unless otherwise authorized). The final rule amends the SSR by removing 31 CFR 538.413 (Funds transfers), an interpretive provision which stated that the transfer of funds to Sudan from the U.S. does not constitute an exportation of services pursuant to 31 CFR 538.205. As a result of this section's removal, money transmittal services to Sudan are prohibited, except as otherwise authorized. (See information on new general licenses below.)

Removal of interpretive provision concerning operation of accounts for certain Sudanese persons. OFAC has removed from Subpart D of the SSR an interpretive provision at 31 CFR 538.412 (Operation of accounts) which stated that the operation of accounts in financial institutions for private Sudanese persons does not constitute the exportation of a service to Sudan. The content of this section now appears in revised form as a new general license in Subpart E of the SSR. (See information on new general licenses below.)

Two general licenses on personal transmittals of money to Sudan & operation of accounts for certain Sudanese individuals. In this final rule, OFAC is also issuing the following new general licenses to amend the SSR:

Noncommercial, personal remittances. OFAC is issuing a general license at 31 CFR 538.528 to authorize U.S. depository institutions, U.S. registered brokers and dealers in securities, and U.S. registered money transmitters to process transfers of funds constituting noncommercial, personal remittances under certain circumstances to or from Sudan or for or on behalf of individuals ordinarily resident in Sudan. OFAC also adds certain definitions to the SSR to clarify the scope of this general license.

Operation of certain personal accounts. OFAC is issuing another general license at 31 CFR 538.527 in Subpart E of the SSA to authorize the operation of accounts in U.S. financial institutions for individuals ordinarily resident in Sudan, provided that transactions through the accounts are of a personal nature. This general license does not authorize account transactions for use in supporting or operating a business; nor does it authorize transfers of funds to Sudan or to or for the benefit of individuals ordinarily resident in Sudan unless authorized by 31 CFR 538.528.

With respect to both general licenses, OFAC notes that these general licenses do not authorize transfers if Subpart B of the SSR otherwise prohibits the underlying transaction.

RPPR amended by removing reference to Government of Sudan. The RPPR are also amended by this final rule, specifically 31 CFR 501.604(b), to remove the Government of Sudan as an example of transactions involving funds transfers that are rejected, but not blocked, as EO 13067 and the SSR now require U.S. financial institutions to block unlicensed funds transfers involving the Government of Sudan.

-written comments may be submitted to OFAC via its Web site, fax, or mail

OFAC Final Rule (FR Pub 06/13/05) available athttp://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-11637.pdf