Hizballah Regulations 31 CFR part 566

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Issued in Washington, DC, on this 11th day
of April 2016.
Judith Starr,
General Counsel, Pension Benefit Guaranty
Corporation.
[FR Doc. 2016–08773 Filed 4–14–16; 8:45 am]
BILLING CODE 7709–02–P

DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 566
Hizballah Financial Sanctions
Regulations
Office of Foreign Assets
Control, Treasury.
ACTION: Final rule.
AGENCY:

The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is adding new part 566
to 31 CFR chapter V to implement the
Hizballah International Financing
Prevention Act of 2015, which requires
the President to prescribe certain
regulations.

SUMMARY:

DATES:

Effective: April 15, 2016.

The
Department of the Treasury’s Office of
Foreign Assets Control: Assistant
Director for Licensing, tel.: 202–622–
2480, Assistant Director for Regulatory
Affairs, tel.: 202–622–4855, Assistant
Director for Sanctions Compliance &
Evaluation, tel.: 202–622–2490; or the
Department of the Treasury’s Office of
the Chief Counsel (Foreign Assets
Control), Office of the General Counsel,
tel.: 202–622–2410.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:

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Electronic and Facsimile Availability
This document and additional
information concerning OFAC are
available from OFAC’s Web site
(www.treasury.gov/ofac). Certain general
information pertaining to OFAC’s
sanctions programs also is available via
facsimile through a 24-hour fax-ondemand service, tel.: 202–622–0077.
Background
On December 18, 2015, the President
signed the Hizballah International
Financing Prevention Act of 2015,

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Public Law 114–102 (HIFPA), into law.
Section 102(a)(1) of HIFPA requires the
President, within 120 days of the
enactment of HIFPA, to prescribe
regulations to prohibit or impose strict
conditions on the opening or
maintaining in the United States of a
correspondent account or a payablethrough account by a foreign financial
institution that the President
determines, on or after December 18,
2015, engages in one or more of the
following activities: (1) Knowingly
facilitating a significant transaction or
transactions for Hizballah; (2)
knowingly facilitating a significant
transaction or transactions of a person
identified on the List of Specially
Designated Nationals and Blocked
Persons (SDN List) maintained by
OFAC, 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.) for acting on behalf of or at the
direction of, or being owned or
controlled by, Hizballah; (3) knowingly
engaging in money laundering to carry
out an activity described in (1) or (2); or
(4) knowingly facilitating a significant
transaction or transactions or providing
significant financial services to carry out
an activity described in (1), (2), or (3).
Pursuant to Presidential
Memorandum of March 18, 2016:
Delegation of Functions Under Sections
102(a), 102(c), 204, and 302 of HIFPA,
the President delegated certain
functions and authorities, with respect
to the determinations provided for
therein, to the Secretary of the Treasury,
in consultation with the Secretary of
State. In furtherance of HIFPA’s
requirement and the Presidential
delegation of functions and authorities
noted above, OFAC is promulgating the
Hizballah Financial Sanctions
Regulations, 31 CFR part 566 (the
‘‘Regulations’’).
Subpart A of the Regulations clarifies
the relation of this part to other laws
and regulations. Subpart B of the
Regulations implements section 102(a)
of HIFPA. The names of foreign
financial institutions that are
determined by the Secretary of the
Treasury, in consultation with the
Secretary of State, to engage in the
activities described in § 566.201(a) of

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the Regulations, and which are subject
to prohibitions or strict conditions on
the opening or maintaining of
correspondent or payable-through
accounts as set forth in § 566.201(b) of
the Regulations, will be listed on the
Hizballah Financial Sanctions
Regulations List (HFSR List) on OFAC’s
Web site (www.treasury.gov/ofac) on the
Counter Terrorism Sanctions page and
published in the Federal Register.
Subpart C of the Regulations defines
key terms used throughout the
Regulations, and subpart D contains
interpretive sections regarding the
Regulations. Section 566.404 of subpart
D of the Regulations sets forth the types
of factors that, as a general matter, the
Secretary of the Treasury will consider
in determining, for purposes of
paragraph (a) of § 566.201, whether
transactions or financial services are
significant.
Transactions otherwise prohibited
under the Regulations but found to be
consistent with U.S. policy may be
authorized by the general licenses
contained in subpart E of the
Regulations or by a specific license
issued pursuant to the procedures
described in subpart E of 31 CFR part
501. Subpart E of the Regulations
includes a general license in § 566.504
authorizing transactions related to
winding down and closing a
correspondent account or a payablethrough account. Section 566.504
authorizes transactions related to
closing a correspondent account or
payable-through account for a foreign
financial institution whose name is
added to the HFSR List during the 10day period beginning on the effective
date of the prohibition in § 566.201.
This general license includes a reporting
requirement pursuant to which a U.S.
financial institution that maintained a
correspondent account or a payablethrough account for a foreign financial
institution whose name is added to the
HFSR List must file a report with OFAC
that provides full details on the closing
of each such account within 30 days of
the closure of the account. The report
must include complete information on
all transactions processed or executed in
winding down and closing the account.
Subpart F of the Regulations refers to
subpart C of part 501 for recordkeeping

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and reporting requirements. Subpart G
of the Regulations describes the civil
and criminal penalties applicable to
violations of the Regulations, as well as
the procedures governing the potential
imposition of a civil monetary penalty.
Subpart G also refers to Appendix A of
part 501 for a more complete
description of these procedures.
Subpart H of the Regulations refers to
subpart E of part 501 for applicable
provisions relating to administrative
procedures and contains a delegation of
authority by the Secretary of the
Treasury. Subpart I of the Regulations
sets forth a Paperwork Reduction Act
notice.

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Public Participation
Because the Regulations involve a
foreign affairs function, the provisions
of Executive Order 12866 and the
Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed
rulemaking, opportunity for public
participation, and delay in effective date
are inapplicable. Because no notice of
proposed rulemaking is required for this
rule, the Regulatory Flexibility Act (5
U.S.C. 601–612) does not apply.
Paperwork Reduction Act
With respect to section 2 of the
Paperwork Reduction Act of 1995, 44
U.S.C. 3507, the collection of
information in § 566.601 of the
Regulations is made pursuant to OFAC’s
Reporting, Procedures and Penalties
Regulations, 31 CFR part 501, and has
been approved by OMB under control
number 1505–0164. See 31 CFR
501.901. The collection of information
in § 566.504(b) of the Regulations has
been submitted to OMB under
Information Collection Request (ICR)
number 201603–1505–002 and is
pending approval. Section 566.504(b)
specifies that a U.S. financial institution
that maintained a correspondent
account or payable-through account for
a foreign financial institution listed on
the HFSR List must file a report with
OFAC that provides full details on the
closing of each such account within 30
days of the closure of the account. This
collection of information assists in
verifying that U.S. financial institutions
are complying with prohibitions on
maintaining correspondent accounts or
payable-through accounts for foreign
financial institutions listed on the HFSR
List, and the information collected will
be used to further OFAC’s compliance
and enforcement functions.
With respect to all of the foregoing
collections of information, an agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information, unless the

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collection of information displays a
valid control number. The likely
respondents and recordkeepers affected
by the new collection of information in
§ 566.504(b) are U.S. financial
institutions operating correspondent
accounts or payable-through accounts
for foreign financial institutions.
Because this is a new collection of
information, OFAC cannot predict the
response rate for the § 566.504(b)
reporting requirement at this time. For
future submissions, OFAC will report
retrospectively on the response rate
during the previous reporting period.
The estimated average reporting/
recordkeeping burden is 2 hours per
response.
Comments are invited on: (a) Whether
this collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information has practical
utility; (b) the accuracy of the agency’s
estimate of the burden of the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques and other forms of
information technology; and (e) the
estimated capital or start-up costs of the
operation, maintenance, and/or
purchase of services to provide
information.
Comments concerning the above
information and the accuracy of these
burden estimates, and suggestions for
reducing this burden, should be
directed to OMB, Attention: Desk
Officer for the Department of the
Treasury, Office of Information and
Regulatory Affairs, Washington, DC
20503, with a copy to Chief of Records,
Attention: Request for Comments, Office
of Foreign Assets Control, Department
of the Treasury, 1500 Pennsylvania
Avenue NW., Freedman’s Bank
Building, Washington, DC 20220. Any
such comments should be submitted not
later than June 14, 2016. All comments
on the collection of information in
§ 566.504(b) will be a matter of public
record.

PART 566—HIZBALLAH FINANCIAL
SANCTIONS REGULATIONS
Subpart A—Relation of This Part to Other
Laws and Regulations
Sec.
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.
Subpart C—General Definitions
566.300
566.301
566.302
566.303
566.304
566.305
566.306
566.307
566.308
566.309
566.310
566.311
566.312
566.313
566.314
566.315
566.316
566.317
566.318
566.319
566.320

Applicability of definitions.
Agent.
Correspondent account.
Covered financial institution.
Effective date.
Entity.
Financial institution.
Financial services.
Financial transaction.
Foreign financial institution.
HIFPA.
Hizballah.
Knowingly.
Licenses; general and specific.
Money laundering.
OFAC.
Payable-through account.
Person.
Transaction account.
United States.
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 transaction or
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 authorization.
566.503 Exclusion from licenses.
566.504 Transactions related to closing a
correspondent or payable-through
account.
Subpart F—Reports

List of Subjects in 31 CFR Part 566

566.601

Administrative practice and
procedure, Banking, Banks, Brokers,
Foreign trade, Hizballah, Investments,
Loans, Money laundering, Securities,
Services.
For the reasons set forth in the
preamble, the Department of the
Treasury’s Office of Foreign Assets
Control adds part 566 to 31 CFR chapter
V to read as follows:

Subpart G—Penalties

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Records and reports.

566.701 Penalties.
566.702 Pre-Penalty Notice; settlement.
566.703 Penalty imposition.
566.704 Administrative collection; referral
to United States Department of Justice.
Subpart H—Procedures
566.801 Procedures.
566.802 Delegation by the Secretary of the
Treasury.

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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.

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

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§ 566.201 Prohibitions or strict conditions
with respect to correspondent or payablethrough 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

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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 payablethrough 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 payablethrough account of the foreign financial
institution;

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(2) Restricting the transactions that
may be processed through the
correspondent account or payablethrough 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 payablethrough 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 payablethrough 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 HFSR List on the Office
of Foreign Assets Control’s Web site
(www.treasury.gov/ofac) on the Counter
Terrorism Sanctions page, 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 HFSR List on OFAC’s Web site
(www.treasury.gov/ofac) on the Counter
Terrorism Sanctions page, and published in
the Federal Register.

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§ 566.202 Evasions; attempts; causing
violations; conspiracies.

corporation, group, subgroup, or other
organization.

(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.
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.

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§ 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 payablethrough 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,

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§ 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.

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§ 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
§ 566.304;
(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
§ 566.304; 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.
§ 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

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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.

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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

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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.

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§ 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

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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.

jstallworth on DSK7TPTVN1PROD with RULES

§ 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

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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 payablethrough account for a foreign financial
institution listed in the HFSR List, U.S.
financial institutions that maintain
correspondent accounts or payablethrough 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 HFSR 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

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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 payablethrough account maintained by the U.S.
financial institution for a foreign
financial institution whose name is
added to the HFSR 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 HFSR 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 HFSR List, maintained on
OFAC’s Web site (www.treasury.gov/ofac) on
the Counter Terrorism Sanctions page. See
§ 566.101.

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
§ 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.
Note to paragraph (a): As of the date of
publication in the Federal Register of the
final rule adding this part to 31 CFR chapter
V, April 15, 2016), IEEPA provides for a
maximum civil penalty not to exceed the

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greater of $250,000 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.

(b) 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.
(c) 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.
(d) 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.
(e) Violations of this part may also be
subject to other applicable laws.

jstallworth on DSK7TPTVN1PROD with RULES

§ 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 and
determines that a civil monetary penalty
or finding of violation is warranted,
OFAC will issue a Pre-Penalty Notice
informing the alleged violator of the
agency’s intent to impose a monetary
penalty or finding of violation. A PrePenalty 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.

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(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 or finding of violations 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

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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.
§ 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
or finding of violation is appropriate,
OFAC may issue a Penalty Notice or
finding of violation to the violator
containing a determination of the
violation and the imposition of the
monetary penalty, if appropriate. For
additional details concerning issuance
of a Penalty Notice or finding of
violation, see Appendix A to part 501 of
this chapter. The issuance of the Penalty
Notice or 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.
§ 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.
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.

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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 (including those pursuant to
statements of licensing policy), and
other procedures, see § 501.901 of this
chapter. 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.
Dated: April 11, 2016.
John E. Smith,
Acting Director, Office of Foreign Assets
Control.
Approved:
Dated: April 11, 2016.
Adam J. Szubin,
Acting Under Secretary, Office of Terrorism
and Financial Intelligence, Department of the
Treasury.
[FR Doc. 2016–08720 Filed 4–14–16; 8:45 am]
BILLING CODE P

DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 100
[Docket No. USCG–2016–0208]
RIN 1625–AA08

Special Local Regulation; Hebda Cup
Rowing Regatta; Detroit River, Trenton
Channel; Wyandotte, MI
Coast Guard, DHS.
Temporary final rule.

AGENCY:
ACTION:

The Coast Guard is
establishing a temporary special local
regulation controlling movement of
vessels for certain waters of the Detroit
River, Trenton Channel. This action is
necessary and is intended to ensure
safety of life on navigable waters to be
used for a rowing event immediately
prior to, during, and immediately after
this event. This regulation requires
vessels to maintain a minimum speed
for safe navigation and maneuvering.
DATES: This temporary final rule is
effective from 7:30 a.m. until 3 p.m. on
April 30, 2016. For the purposes of
enforcement, actual notice will be used
on April 30, 2016.
ADDRESSES: To view documents
mentioned in this preamble as being
available in the docket, go to http://

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SUMMARY:

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www.regulations.gov, type USCG–2016–
0208 in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rule.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this temporary
final rule, call or email Petty Officer
Todd Manow, Prevention Department,
Sector Detroit, Coast Guard; telephone
313–568–9508, email Todd.M.Manow@
uscg.mil.
SUPPLEMENTARY INFORMATION:
I. Table of Abbreviations
COTP Captain of the Port
DHS Department of Homeland Security
E.O. Executive Order
NAD 83 North American Datum of 1983
NPRM Notice of Proposed Rulemaking

II. Background History and Regulatory
Information
On April 30, 2016, the Wyandotte
Boat Club is holding a rowing regatta in
which at least 100 youth rowers will
participate in a race in the Trenton
Channel, a tributary of the Detroit River.
Due to the projected amount of humanpowered watercraft on the water, there
is a need to require vessels in the
affected waterways to maintain a
minimum speed for safe navigation. The
rowing regatta will occur between 7:30
a.m. and 3 p.m. on April 30, 2016. This
event has taken place under the same
sponsorship in the same location
annually for the past 51 years.
The Coast Guard is issuing this
temporary final rule without prior
notice and opportunity to comment
pursuant to authority under section 4(a)
of the Administrative Procedure Act
(APA) (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency, for good
cause, finds that those procedures are
‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b)(B), the Coast Guard finds that
good cause exists for not publishing a
notice of proposed rulemaking (NPRM)
with respect to this rule because doing
so would be impracticable. The final
details of this event were not known to
the Coast Guard until there was
insufficient time remaining before the
event to publish an NPRM. Thus,
delaying the effective date of this rule to
wait for a comment period to run would
be impracticable because it would
inhibit the Coast Guard’s ability to event
participants, spectators, and other
waterway users during this youth
rowing regatta.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this temporary rule effective less

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than 30 days after publication in the
Federal Register. For the same reasons
discussed in the preceding paragraph,
waiting for a 30 day notice period to run
would be impracticable.
III. Legal Authority and Need for Rule
The Coast Guard is issuing this rule
under authority in 33 U.S.C. 1231, 33
CFR 1.05–1 and 160.5; and Department
of Homeland Security Delegation No.
0170.1. The Captain of the Port Detroit
(COTP) has determined that the likely
combination of recreation vessels,
commercial vessels, and an unknown
number of spectators in close proximity
to a youth rowing regatta along the
water pose extra and unusual hazards to
public safety and property. Therefore,
the COTP is establishing a Special Local
Regulation around the event location to
help minimize risks to safety of life and
property during this event.
IV. Discussion of Rule
This rule establishes a temporary
special local regulation from 7:30 a.m.
until 3 p.m. on April 30, 2016. In light
of the aforementioned hazards, the
COTP has determined that a special
local regulation is necessary to protect
spectators, vessels, and participants.
The special local regulation will
encompass the following waterway: All
waters of the Detroit River, Trenton
Channel between the following two
lines going from bank-to-bank: The first
line is drawn directly across the channel
from position 42°11.0′ N., 083°09.4′ W.
(NAD 83); the second line, to the north,
is drawn directly across the channel
from position 42°11.7′ N., 083°8.9′ W.
(NAD 83).
An on-scene representative of the
COTP or event sponsor representatives
may permit vessels to transit the area
when no race activity is occurring. The
on-scene representative may be present
on any Coast Guard, state or local law
enforcement vessel assigned to patrol
the event. Vessel operators desiring to
transit through the regulated area must
contact the Coast Guard Patrol
Commander to obtain permission to do
so. The COTP or his designated onscene representative may be contacted
via VHF Channel 16.
The COTP or his designated on-scene
representative will notify the public of
the enforcement of this rule by all
appropriate means, including a
Broadcast Notice to Mariners and Local
Notice to Mariners.
V. Regulatory Analyses
We developed this rule after
considering numerous statutes and
executive orders related to rulemaking.
Below we summarize our analyses

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