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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 560

Iranian Transactions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
SUMMARY: The Department of the Treasury's Office of Foreign Assets Control ("OFAC") is changing the heading of the Iranian Transactions Regulations to the Iranian Transactions and Sanctions Regulations (the "ITSR"), amending the renamed ITSR, and reissuing them in their entirety, to implement Executive Order 13599 of February 5, 2012 ("Blocking Property of the Government of Iran and Iranian Financial Institutions"), and subsections 1245(c) and (d)(1)(B) of the National Defense Authorization Act for Fiscal Year 2012 (the "NDAA"). OFAC also is adding several new general licenses to the ITSR, removing a few general licenses, and incorporating into the ITSR a general license and a statement of licensing policy that, until now, have appeared only on OFAC's Web site on the Iran sanctions page. Finally, OFAC is updating certain provisions of the ITSR and making other technical and conforming changes. The ITSR are separate and apart from the Iranian Financial Sanctions Regulations, 31 CFR part 561, as amended and reissued in their entirety on February 27, 2012, which were promulgated to implement the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, as well as the provisions of section 1245 of the NDAA other than those set forth above.
DATES: Effective Date:October 22, 2012.
FOR FURTHER INFORMATION CONTACT: Assistant Director for Sanctions Compliance & Evaluation, tel.: 202/622-2490, Assistant Director for Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 202/622-4855, Office of Foreign Assets Control, or Chief Counsel (Foreign Assets Control), tel.: 202/622-2410, Office of the General Counsel, Department of the Treasury (not toll free numbers).
SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

This document and additional information concerning OFAC are available from OFAC's Web site (www.treas.gov/ofac). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

Background

The Iranian Transactions Regulations, 31 CFR part 560 (the “ITR”), implement a series of Executive orders that began with Executive Order 12613, which was issued on October 29, 1987, pursuant to authorities including the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9). In that Order, the President prohibited the importation of Iranian-origin goods and services. Subsequently, in Executive Order 12957, issued on March 15, 1995 (“E.O. 12957”), under the authority of,inter alia,the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”) and the National Emergencies Act (50 U.S.C. 1601et seq.) (“NEA”), the President declared a national emergency with respect to the actions and policies of the Government of Iran, including its support for international terrorism, its efforts to undermine the Middle East peace process, and its efforts to acquire weapons of mass destruction and the means to deliver them. To deal with that threat, E.O. 12957 imposed prohibitions on certain transactions with respect to the development of Iranian petroleum resources. On May 6, 1995, to further respond to this threat, the President issued Executive Order 12959, which imposed comprehensive trade and financial sanctions on Iran, but did not include blocking sanctions. Finally, on August 19, 1997, the President issued Executive Order 13059 consolidating and clarifying the previous orders.

On December 31, 2011, the President signed into law the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81) (the “NDAA”). Section 1245 of the NDAA, among other things, provides for the imposition of sanctions on the Central Bank of Iran and other Iranian financial institutions. Specifically, section 1245(c) provides that the President shall, pursuant to IEEPA, block and prohibit all transactions in all property and interests in property of an Iranian financial institution if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person. In addition, section 1245(d)(1)(B) of the NDAA authorizes the President to impose sanctions pursuant to IEEPA with respect to the Central Bank of Iran. Finally, section 1245(g) of the NDAA provides that the President may exercise all authorities under sections 203 and 205 of IEEPA and may impose the penalties provided in section 206(b) and (c) of IEEPA to implement and enforce section 1245 of the NDAA.

On February 5, 2012, the President, invoking the authority of,inter alia,IEEPA and section 1245 of the NDAA, issued Executive Order 13599 (“Blocking Property of the Government of Iran and Iranian Financial Institutions”) (“E.O. 13599”). The President issued E.O. 13599 in order to take additional steps with respect to the national emergency declared in E.O. 12957 with respect to Iran, particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks to conceal transactions of sanctioned parties, the deficiencies in Iran's anti-money laundering regime and the weaknesses in its implementation, and the continuing and unacceptable risk posed to the international financial system by Iran's activities.

Section 1 of E.O. 13599 generally blocks all property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any U. S. person, including any foreign branch, of (1) the Government of Iran, including the Central Bank of Iran, (2) any Iranian financial institution, including the Central Bank of Iran, and (3) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to E.O. 13599. The property and interests in property of the Government of Iran, any Iranian financial institution, and any other person described above may not be transferred, paid, exported, withdrawn, or otherwise dealt in.

In section 2 of E.O. 13599, the President determined that the making of donations of certain articles, such as food, clothing, and medicine, intended to be used to relieve human suffering, as specified in section 203(b)(2) of IEEPA (50 U.S.C. 1702(b)(2)), by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to section 1 of the order would seriously impair his ability to deal with the national emergency declared in E.O. 12957. The President therefore prohibited the donation of such items as provided by section 1 of E.O. 13599.

Section 3 of E.O. 13599 provides that the prohibitions in section 1 of the order include, but are not limited to, the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whoseproperty and interests in property are blocked pursuant to the order, and the receipt of any contribution or provision of funds, goods, or services from any such person.

Section 4(b) of E.O. 13599 provides that the prohibitions in section 1 of the order do not apply to property and interests in property of the Government of Iran that were blocked pursuant to Executive Order 12170 of November 14, 1979 (the Executive order issued in response to the takeover of the U.S. Embassy in Tehran and the taking hostage of U.S. diplomats and other persons on November 4, 1979), and thereafter made subject to the transfer directives set forth in Executive Order 12281 of January 19, 1981 (one of the Executive orders that implemented the Algiers Accords of the same date), and implementing regulations thereunder (i.e., the Iranian Assets Control Regulations, 31 CFR part 535).

Section 5 of E.O. 13599 prohibits any transaction 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 the order, as well as any conspiracy formed to violate such prohibitions.

Section 6 of E.O. 13599 provides that nothing in section 1 shall prohibit transactions for the conduct of the official business of the Federal Government by employees, grantees, or contractors thereof.

Section 9 of E.O. 13599 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, and to employ all powers granted to the President by IEEPA as may be necessary to carry out the purposes of E.O. 13599, other than the purposes described in section 11 (which are delegated to the Secretary of State). The Secretary of the Treasury may redelegate any of these functions and authorities to other officers and agencies of the United States Government consistent with applicable law.

Acting under authority delegated by the Secretary of the Treasury pursuant to section 9 of E.O. 13599, OFAC is changing the heading of the Iranian Transactions Regulations, 31 CFR part 560 (the “ITR”), to the Iranian Transactions and Sanctions Regulations, 31 CFR part 560 (the “ITSR”), and amending the renamed ITSR to implement E.O. 13599 (other than section 11) and sections 1245(c) and (d)(1)(B) of the NDAA. To implement the blocking prohibitions of E.O. 13599 and the NDAA, OFAC is adding numerous new sections to the ITSR, including prohibitions, definitions, interpretations, and licensing provisions. OFAC also is revising many existing sections of the ITSR in order to take account of the new government-wide blocking as well as the blocking of all Iranian financial institutions. Due to the extensive nature of these amendments, OFAC is reissuing the ITSR in their entirety.

In addition to the changes needed to implement a blocking program, OFAC is adding to the ITSR several new general licenses, incorporating into the ITSR a general license and a statement of licensing policy that, until now, have appeared only on OFAC's Web site on the Iran sanctions page, and removing several general licenses and statements of licensing policy that previously were part of the Iranian Transactions Regulations. Finally, OFAC is updating certain provisions of the ITSR and making other technical and conforming changes.

Accordingly, new section 560.211 is being added to subpart B of the ITSR to implement the blocking prohibitions in section 1 of E.O. 13599. New sections 560.212 through 560.214 are being added to subpart B to set forth certain consequences and requirements that stem from the blocking prohibitions, including,inter alia,the requirement to hold blocked funds in interest-bearing accounts. New paragraphs (e) and (f) are being added to section 560.210 to incorporate two exemptions from the blocking prohibitions that are set forth, respectively, in sections 6 and 4(b) of E.O. 13599. What had been paragraph (e) of section 560.210 of the ITR has been removed as out-of-date.

In subpart C, which defines key terms used throughout the ITSR, new sections 560.322 through 560.327 are being added to define key terms used in the new blocking prohibitions or elsewhere in the regulations. Also, certain existing definitions in subpart C are being revised to take account of new provisions, to provide greater clarity with respect to the terms being used, and to update certain definitions.

For the same reasons, in subpart D, which contains interpretive sections regarding the ITSR, new sections 560.421 through 560.428 are being added and changes are being made to certain existing sections. Among these changes, an important change is being made to section 560.405, which provides that transactions ordinarily incident to a licensed transaction and necessary to give effect to it are also authorized, with certain exceptions. A new exception for payments or transfers of funds is being added in paragraph (b) of section 560.405. Thus, payments or transfers of funds no longer are considered ordinarily incident to a licensed transaction and instead must be authorized by a general or specific license. A new note to paragraph (b) of section 560.405 refers to section 560.516 for a general license authorizing United States depository institutions or United States registered brokers or dealers in securities to process transfers of funds if the transfer arises from, and is ordinarily incident and necessary to give effect to, an underlying transaction authorized by a specific or general license issued pursuant to, or set forth in, this part. (A final change to section 560.405 that deals with sales of agricultural commodities, medicine, and medical devices is discussed below.)

Subpart E of the ITSR contains (1) general licenses that authorize transactions otherwise prohibited under the ITSR but found to be consistent with U.S. policy, and (2) statements of licensing policy that describe transactions that may be authorized by specific license issued pursuant to the procedures described in subpart E of 31 CFR part 501. Subpart E of the ITSR is being extensively revised, and certain sections also are being renumbered. New general licenses are being added in sections 560.519, 560.543, 560.544, 560.546 through 560.548, and 560.551 through 560.554. New sections 560.545 and 560.550 incorporate into the ITSR, respectively, a statement of licensing policy and a general license that, until now, have been posted only on OFAC's Web site; new section 560.550 also reflects significant changes to the general license. Section 560.549 contains a statement of licensing policy for Iranian news organizations' offices in the United States that previously was found in section 560.519, which is now a general license authorizing specified journalistic activities and the establishment of news bureaus in Iran, subject to certain limitations.

Moreover, revisions are being made to several pre-existing authorizations, including those in sections 560.505, 560.508, 560.516, 560.517 and 560.530. Furthermore, certain general licenses and statements of licensing policy that previously appeared in the ITR are being removed and hence not added to the ITSR, either because they are out-of-date (e.g., ITR sections 560.513, 560.515, 560.520, 560.536, 560.537) or because they are no longer consistent with U.S. policy (e.g., ITR sections 560.511 and 560.526).

In addition, OFAC is revising the sections of the ITSR dealing with authorized sales of agricultural commodities, medicine, and medical devices to Iran pursuant to the Trade Sanctions Reform and ExportEnhancement Act of 2000, as amended (22 U.S.C. 7201et seq.) (“TSRA”). First, OFAC is amending section 560.530 to add a general license, in new paragraph (a)(3), authorizing the exportation or reexportation of medicine and basic medical supplies to Iran. The termmedicinealready is defined in paragraph (e)(2) of section 560.530. The termbasic medical suppliesis newly defined in paragraph (a)(3)(ii) to mean those medical devices, as defined in paragraph (e)(3) of section 560.530, that are included on the List of Basic Medical Supplies on the Office of Foreign Assets Control's Web site (www.treasury.gov/ofac) on the Iran Sanctions page, but not including replacement parts. The List of Basic Medical Supplies generally will contain medical devices (excluding replacement parts) for which OFAC previously did not require an Official Commodity Classification of EAR99 issued by the Department of Commerce's Bureau of Industry and Security to be submitted with a specific license application and which are now generally licensed. Certain classes of medicine are excluded from the scope of this general license by new paragraph (a)(3)(iii) of section 560.530. Exports of medicine and basic medical supplies to military or law enforcement purchasers or importers are excluded from the scope of this general license by new paragraph (a)(3)(iv) of section 560.530.

Second, OFAC is amending sections 560.530 and 560.532, as well as interpretive section 560.405 in subpart D of the ITSR, to clarify the rules for financing of TSRA sales. New paragraph (a)(3)(i) of section 560.530 provides that payment terms and financing for sales pursuant to the new general license for medicine and basic medical supplies must be limited to, and consistent with, those authorized by section 560.532. Paragraph (a)(2)(i) of section 560.530 is being amended to add the same requirement to the existing general license for exports of food.

OFAC is revising section 560.532 to provide that the general license for payment terms in that section applies to all sales pursuant to section 560.530(a), whether authorized by general or specific license. OFAC also is revising paragraph (e) of section 560.405 to clarify that financing of all TSRA sales authorized pursuant to section 560.530(a) is excepted from the authorization in section 560.405 for transactions ordinarily incident to a licensed transaction. Sections 560.530 and 560.532, which authorize the conduct of related transactions, including payment terms and financing, for the TSRA sales described above, govern instead.

Third, a new authorized payment term for all TSRA sales is being added in section 560.532. New paragraph (a)(4) of section 560.532 specifies that the new payment term is a letter of credit issued by an Iranian financial institution whose property and interests in property are blocked solely pursuant to 31 CFR part 560. Such a letter of credit must be initially advised, confirmed or otherwise dealt in by a third-country financial institution that is not a United States person, an Iranian financial institution, or the Government of Iran before it is advised, confirmed or dealt in by a U.S. financial institution.

Fourth, OFAC is amending the rules for TSRA sales by revising section 560.530(f), to clarify that the termmedicinedoes not include cosmetics, and making other technical and conforming changes to sections 560.530, 560.532, and 560.533.

Finally, OFAC is removing both Appendix A to Part 560, which listed persons determined to be the Government of Iran (as defined in section 560.304) and Appendix C to Part 560. The persons that were listed in Appendix A to Part 560 are listed on OFAC's List of Specially Designated Nationals and Blocked Persons, and their property and interests in property are blocked pursuant to E.O. 13599 and section 560.211 of the ITSR; maintaining a separate Appendix A to Part 560, therefore, no longer serves any useful purpose. Appendix C to Part 560 set forth eligible procurement bodies of the Government of Iran for purposes of a statement of licensing policy that was removed from the ITSR when TSRA was first implemented. It too no longer serves any purpose.

This final rule, in addition to renaming, amending, and reissuing the ITR as the ITSR, also makes a conforming amendment to Appendix A to 31 CFR chapter V.

Public Participation

Because the ITSR 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

The collections of information related to the ITSR are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

List of Subjects in 31 CFR Part 560

Administrative practice and procedure, Banks, Banking, Brokers, Foreign Trade, Investments, Loans, Securities, Iran.

For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control amends 31 CFR chapter V as follows:

1. Revise 31 CFR part 560 to read as follows: PART 560—IRANIAN TRANSACTIONS AND SANCTIONS REGULATIONS Subpart A—Relation of This Part to Other Laws and Regulations Sec. 560.101 Relation of this part to other laws and regulations. Subpart B—Prohibitions 560.201 Prohibited importation of goods or services from Iran. 560.202 [Reserved] 560.203 Evasions; attempts; causing violations; conspiracies. 560.204 Prohibited exportation, reexportation, sale or supply of goods, technology, or services to Iran. 560.205 Prohibited reexportation of goods, technology or services to Iran or the Government of Iran by persons other than United States persons; exceptions. 560.206 Prohibited trade-related transactions with Iran; goods, technology, or services. 560.207 Prohibited investment. 560.208 Prohibited facilitation by United States persons of transactions by foreign persons. 560.209 Prohibited transactions with respect to the development of Iranian petroleum resources. 560.210 Exempt transactions. 560.211 Prohibited transactions involving blocked property. 560.212 Effect of transfers violating the provisions of this part. 560.213 Holding of funds in interest-bearing accounts; investment and reinvestment. 560.214 Expenses of maintaining blocked physical property; liquidation of blocked property. Subpart C—General Definitions 560.301 Effective date. 560.302 [Reserved] 560.303 Iran; Iranian. 560.304 Government of Iran. 560.305 Person; entity. 560.306 Iranian-origin goods or services; goods or services owned or controlled by the Government of Iran. 560.307 United States. 560.308 Importation of goods. 560.309 [Reserved] 560.310 License. 560.311 General license. 560.312 Specific license. 560.313 Entity owned or controlled by the Government of Iran. 560.314 United States person; U.S. person. 560.315 Information or informational materials. 560.316 New investment. 560.317 Credits or loans. 560.318 [Reserved] 560.319 United States depository institution. 560.320 Iranian accounts. 560.321 United States registered broker or dealer in securities. 560.322 Blocked account; blocked property. 560.323 Interest. 560.324 Iranian financial institution. 560.325 Property; property interest. 560.326 Transfer. 560.327 U.S. financial institution. Subpart D—Interpretations 560.401 Reference to amended sections. 560.402 Effect of amendment. 560.403 Transshipment or transit through Iran. 560.404 [Reserved] 560.405 Transactions ordinarily incident to a licensed transaction authorized. 560.406 Transshipment or transit through the United States. 560.407 Transactions related to Iranian-origin goods. 560.408 Importation into and release from a bonded warehouse or foreign trade zone. 560.409 [Reserved] 560.410 Provision of services. 560.411 [Reserved] 560.412 Extensions of credit or loans to Iran. 560.413 [Reserved] 560.414 Reexportation of certain U.S.-origin goods exported prior to May 7, 1995. 560.415 [Reserved] 560.416 Brokering services. 560.417 Facilitation; change of policies and procedures; referral of business opportunities offshore. 560.418 Release of technology or software in the United States or a third country. 560.419 U.S. employment of persons ordinarily resident in Iran. 560.420 Reexportation by non-U.S. persons of certain foreign-made products containing U.S.-origin goods or technology. 560.421 Setoffs prohibited. 560.422 Termination and acquisition of an interest in blocked property. 560.423 Offshore transactions involving blocked property. 560.424 Payments from blocked accounts to satisfy obligations prohibited. 560.425 Entities owned by a person whose property and interests in property are blocked. 560.426 Charitable contributions. 560.427 Exportation, reexportation, sale or supply of financial services to Iran or the Government of Iran. 560.428 Credit extended and cards issued by U.S. financial institutions. Subpart E—Licenses, Authorizations, and Statements of Licensing Policy 560.501 General and specific licensing procedures. 560.502 Effect of license or authorization. 560.503 Exclusion from licenses and authorizations. 560.504 [Reserved] 560.505 Activities and services related to certain nonimmigrant and immigrant categories authorized. 560.506 Importation and exportation of certain gifts authorized. 560.507 [Reserved] 560.508 Telecommunications and mail transactions authorized. 560.509 Certain transactions related to patents, trademarks, and copyrights authorized. 560.510 Transactions related to the resolution of disputes between the United States or United States nationals and the Government of Iran. 560.511 [Reserved] 560.512 Iranian Government missions in the United States. 560.513-560.515 [Reserved] 560.516 Transfers of funds involving Iran. 560.517 Exportation of services: Iranian accounts at United States depository institutions or United States registered brokers or dealers in securities. 560.518 Transactions in Iranian-origin and Iranian Government property. 560.519 Journalistic activities and establishment of news bureaus in Iran. 560.520 [Reserved] 560.521 Diplomatic pouches. 560.522 Allowable payments for overflights of Iranian airspace. 560.523 Exportation of equipment and services relating to information and informational materials. 560.524 Household goods and personal effects. 560.525 Provision of certain legal services. 560.526 [Reserved] 560.527 Rescheduling existing loans. 560.528 Aircraft safety. 560.529 Bunkering and emergency repairs. 560.530 Commercial sales, exportation, and reexportation of agricultural commodities, medicine, and medical devices. 560.531 [Reserved] 560.532 Payment for and financing of exports and reexports of agricultural commodities, medicine, and medical devices. 560.533 Brokering sales of agricultural commodities, medicine, and medical devices. 560.534-560.537 [Reserved] 560.538 Authorized transactions necessary and ordinarily incident to publishing. 560.539 Official activities of certain international organizations. 560.540 Exportation of certain services and software incident to Internet-based communications. 560.541 Third-country diplomatic and consular funds transfers. 560.542 Importation or exportation of human remains for burial, cremation, or interment authorized. 560.543 Sale of certain real property in Iran and transfer of related funds to the United States. 560.544 Certain educational activities by U.S. persons in third countries authorized. 560.545 Democracy and human rights in Iran and academic and cultural exchange programs. 560.546 Payments and transfers to blocked accounts in U.S. financial institutions. 560.547 Entries in certain accounts for normal service charges authorized. 560.548 Investment and reinvestment of certain funds. 560.549 Policy governing Iranian news organizations' offices in the United States. 560.550 Certain noncommercial, personal remittances to or from Iran authorized. 560.551 Student loan payments from persons in Iran authorized. 560.552 Transactions related to U.S. citizens residing in Iran. 560.553 Payments from funds originating outside the United States authorized. 560.554 Importation and exportation of services related to conferences in the United States or third countries authorized. Subpart F—Reports 560.601 Records and reports. 560.602-560.603 [Reserved] Subpart G—Penalties 560.701 Penalties. 560.702 Detention of shipments. 560.703 Pre-Penalty Notice; settlement. 560.704 Penalty imposition. 560.705 Administrative collection; referral to United States Department of Justice. Subpart H—Procedures 560.801 Procedures. 560.802 Delegation by the Secretary of the Treasury. 560.803 [Reserved] Subpart I—Paperwork Reduction Act 560.901 Paperwork Reduction Act notice. Appendix A to Part 560 [Reserved] Appendix B to Part 560—BulkAgricultural Commodities Appendix C to Part 560[Reserved] Authority:

3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 2349aa-9; 22 U.S.C. 7201-7211; 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. 111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551); Pub. L. 112-81, 125 Stat. 1298; E.O. 12613, 52 FR 41940, 3 CFR, 1987 Comp., p. 256; E.O. 12957, 60 FR 14615, 3 CFR, 1995 Comp., p. 332; E.O. 12959, 60 FR 24757, 3 CFR, 1995 Comp., p. 356; E.O. 13059, 62 FR 44531, 3 CFR, 1997 Comp., p. 217; E.O. 13599, 77 FR6659, February 8, 2012; E.O. 13628, 77 FR 62139, October 12, 2012.

Subpart A—Relation of This Part to Other Laws and Regulations
§ 560.101 Relation of this part to other laws and regulations.

This part is separate from, and independent of, the other parts of this chapter, including part 535 of this chapter, “Iranian Assets Control Regulations,” part 561 of this chapter, “Iranian Financial Sanctions Regulations,” and part 562 of this chapter, “Iranian Human Rights Abuses Sanctions Regulations,” 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
§ 560.201 Prohibited importation of goods or services from Iran.

Except as otherwise authorized pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, the importation into the United States of any goods or services of Iranian origin or owned or controlled by the Government of Iran, other than information and informational materials within the meaning of section 203(b)(3) of the International Emergency Economic Powers Act (50 U.S.C. 1702(b)(3)), is prohibited.

§ 560.202 [Reserved]
§ 560.203 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.

§ 560.204 Prohibited exportation, reexportation, sale, or supply of goods, technology, or services to Iran.

Except as otherwise authorized pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran is prohibited, including the exportation, reexportation, sale, or supply of any goods, technology, or services to a person in a third country undertaken with knowledge or reason to know that:

(a) Such goods, technology, or services are intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran or the Government of Iran; or

(b) Such goods, technology, or services are intended specifically for use in the production of, for commingling with, or for incorporation into goods, technology, or services to be directly or indirectly supplied, transshipped, or reexported exclusively or predominantly to Iran or the Government of Iran.

§ 560.205 Prohibited reexportation of goods, technology, or services to Iran or the Government of Iran by persons other than United States persons; exceptions.

(a) Except as otherwise authorized pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, the reexportation from a third country, directly or indirectly, by a person other than a United States person, of any goods, technology, or services that have been exported from the United States is prohibited, if:

(1) Undertaken with knowledge or reason to know that the reexportation is intended specifically for Iran or the Government of Iran; and

(2) The exportation of such goods, technology, or services from the United States to Iran was subject to export license application requirements under any United States regulations in effect on May 6, 1995, or thereafter is made subject to such requirements imposed independently of this part (see § 560.414).

(b) The prohibitions of paragraph (a) of this section shall not apply to those goods or that technology subject to export license application requirements if such goods or technology have been:

(1) Substantially transformed into a foreign-made product outside the United States; or

(2) Incorporated into a foreign-made product outside the United States if the aggregate value of such goods and technology described in paragraph (a)(2) of this section constitutes less than 10 percent of the total value of the foreign-made product to be exported from a third country (see § 560.420).

Note to § 560.205(b):

The reexportation of U.S.-origin goods or technology, including U.S.-origin goods or technology that have been incorporated or substantially transformed into a foreign-made product, not prohibited by this section, may require authorization by the U.S. Department of Commerce under the Export Administration Regulations (15 CFR parts 730-774) or by the U.S. State Department under the International Traffic in Arms Regulations (22 CFR 123.9).

(c) Reexportation by United States persons or from the United States is governed by other sections in this part, including §§ 560.204 and 560.206.

§ 560.206 Prohibited trade-related transactions with Iran; goods, technology, or services.

(a) Except as otherwise authorized pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, no United States person, wherever located, may engage in any transaction or dealing in or related to:

(1) Goods or services of Iranian origin or owned or controlled by the Government of Iran; or

(2) Goods, technology, or services for exportation, reexportation, sale or supply, directly or indirectly, to Iran or the Government of Iran.

(b) For purposes of paragraph (a) of this section, the term transaction or dealing includes but is not limited to purchasing, selling, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing.

§ 560.207 Prohibited investment.

Except as otherwise authorized pursuant to this part, and notwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, any new investment by a United States person in Iran or in property (including entities) owned or controlled by the Government of Iran is prohibited.

§ 560.208 Prohibited facilitation by United States persons of transactions by foreign persons.

Except as otherwise authorized pursuant to this part, andnotwithstanding any contract entered into or any license or permit granted prior to May 7, 1995, no United States person, wherever located, may approve, finance, facilitate, or guarantee any transaction by a foreign person where the transaction by that foreign person would be prohibited by this part if performed by a United States person or within the United States.

§ 560.209 Prohibited transactions with respect to the development of Iranian petroleum resources.

Except as otherwise authorized, and notwithstanding any contract entered into or any license or permit granted prior to March 16, 1995, the following are prohibited:

(a) The entry into or performance by a United States person, or the approval by a United States person of the entry into or performance by an entity owned or controlled by a United States person, of:

(1) A contract that includes overall supervision and management responsibility for the development of petroleum resources located in Iran, or

(2) A guaranty of another person's performance under such contract; or

(b) The entry into or performance by a United States person, or the approval by a United States person of the entry into or performance by an entity owned or controlled by a United States person, of:

(1) A contract for the financing of the development of petroleum resources located in Iran, or

(2) A guaranty of another person's performance under such a contract.

§ 560.210 Exempt transactions.

(a)Personal communications.The prohibitions contained in this part do not apply to any postal, telegraphic, telephonic, or other personal communication that does not involve the transfer of anything of value.

(b)Humanitarian donations.The prohibitions of §§ 560.204 and 560.206 do not apply to donations by United States persons of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering.

(c)Information or informational materials.(1) The prohibitions contained in this part do not apply to the importation from any country and the exportation to any country of information or informational materials, as defined in § 560.315, whether commercial or otherwise, regardless of format or medium of transmission.

(2) This section does not exempt from regulation or authorize transactions related to information or informational materials not fully created and in existence at the date of the transactions, or to the substantive or artistic alteration or enhancement of informational materials, or to the provision of marketing and business consulting services. Such prohibited transactions include, but are not limited to, payment of advances for information or informational materials not yet created and completed (with the exception of prepaid subscriptions for widely circulated magazines and other periodical publications); provision of services to market, produce or co-produce, create, or assist in the creation of information or informational materials; and payment of royalties with respect to income received for enhancements or alterations made by U.S. persons to such information or informational materials.

(3) This section does not exempt or authorize transactions incident to the exportation of software subject to the Export Administration Regulations, 15 CFR parts 730 through 774, or to the exportation of goods (including software) or technology for use in the transmission of any data, or to the provision, sale, or leasing of capacity on telecommunications transmission facilities (such as satellite or terrestrial network connectivity) for use in the transmission of any data. The exportation of such items or services and the provision, sale, or leasing of such capacity or facilities to Iran, the Government of Iran, an Iranian financial institution, or any other person whose property and interests in property are blocked pursuant to § 560.211 are prohibited.

Note to paragraph (c)(3) of § 560.210:

See§ 560.540 of this part for a general license authorizing the exportation to persons in Iran of certain services and software incident to the exchange of personal communications over the Internet.

(d)Travel.The prohibitions contained in this part do not apply to transactions ordinarily incident to travel to or from any country, including importation or exportation of accompanied baggage for personal use, maintenance within any country including payment of living expenses and acquisition of goods or services for personal use, and arrangement or facilitation of such travel including nonscheduled air, sea, or land voyages.

(e)Official Business.The prohibitions in § 560.211 do not apply to transactions for the conduct of the official business of the Federal Government by employees, grantees, or contractors thereof.

(f) The prohibitions in § 560.211 do not apply to property and interests in property of the Government of Iran that were blocked pursuant to Executive Order 12170 of November 14, 1979, and thereafter made subject to the transfer directives set forth in Executive Order 12281 of January 19, 1981, and implementing regulations thereunder.

§ 560.211 Prohibited transactions involving blocked property.

(a) All property and interests in property of the Government of Iran, including the Central Bank of Iran, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.

(b) All property and interests in property of any Iranian financial institution, including the Central Bank of Iran, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.

(c) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any foreign branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to paragraphs (a) through (c) of this section.

Note 1 to paragraphs (a) through (c) of § 560.211:

The names of persons identified as already blocked or designated for blocking pursuant to Executive Order 13599 of February 5, 2012, whose property and interests in property therefore are blocked pursuant to this section, are published in theFederal Registerand incorporated into the Office of Foreign Assets Control's Specially Designated Nationals and Blocked Persons List (“SDN List”) with the identifier “[IRAN].” The SDN List is accessible through the following page on the Office of Foreign Control's Web site:www.treasury.gov/sdn. Additional information pertaining to the SDN List can be found in Appendix A to this chapter.See§ 560.425 concerning entities that may not be listed on the SDN List but whose property and interests in property arenevertheless blocked pursuant to this section. Executive Order 13599 blocks the property and interests in property of the Government of Iran and Iranian financial institutions, as defined in § 560.304 and § 560.324, respectively. The property and interests in property of persons falling within the definition of the termsGovernment of IranandIranian financial institutionare blocked pursuant to this section regardless of whether the names of such persons are published in theFederal Registeror incorporated into the SDN List.

Note 2 to paragraph (a) through (c) of § 560.211:

The International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”), in section 203 (50 U.S.C. 1702), authorizes the blocking of property and interests in property of a person during the pendency of an investigation. The names of persons whose property and interests in property are blocked pending investigation pursuant to this section also are published in theFederal Registerand incorporated into the SDN List with the identifier “[BPI-IRAN].”

Note 3 to paragraph (a) through (c) of § 560.211:

Sections 501.806 and 501.807 of this chapter describe the procedures to be followed by persons seeking, respectively, the unblocking of funds that they believe were blocked due to mistaken identity, or administrative reconsideration of their status as the Government of Iran, an Iranian financial institution, or any other person whose property and interests in property are blocked pursuant to this section.

(d) The prohibitions in paragraphs (a) through (c) of this section include, but are not limited to, prohibitions on the following transactions:

(1) The making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to paragraphs (a) through (c) of this section; and

(2) The receipt of any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked pursuant to paragraphs (a) through (c) of this section.

(e) Unless authorized by this part or by a specific license expressly referring to this section, any dealing in any security (or evidence thereof) held within the possession or control of a U.S. person and either registered or inscribed in the name of, or known to be held for the benefit of, or issued by, the Government of Iran, an Iranian financial institution, or any other person whose property and interests in property are blocked pursuant to this section is prohibited. This prohibition includes but is not limited to the transfer (including the transfer on the books of any issuer or agent thereof), disposition, transportation, importation, exportation, or withdrawal of, or the endorsement or guaranty of signatures on, any such security on or after the effective date. This prohibition applies irrespective of the fact that at any time (whether prior to, on, or subsequent to the effective date) the registered or inscribed owner of any such security may have or might appear to have assigned, transferred, or otherwise disposed of the security.

(f) The prohibitions in paragraphs (a) through (c) of this section apply except to the extent transactions are authorized by regulations, orders, directives, rulings, instructions, licenses, or otherwise, and notwithstanding any contracts entered into or any license or permit granted prior to the effective date.

§ 560.212 Effect of transfers violating the provisions of this part.

(a) Any transfer after the effective date that is in violation of any provision of this part or of any regulation, order, directive, ruling, instruction, or license issued pursuant to this part, and that involves any property or interest in property blocked pursuant to § 560.211, is null and void and shall not be the basis for the assertion or recognition of any interest in or right, remedy, power, or privilege with respect to such property or property interests.

(b) No transfer before the effective date shall be the basis for the assertion or recognition of any right, remedy, power, or privilege with respect to, or any interest in, any property or interest in property blocked pursuant to § 560.211, unless the person who holds or maintains such property, prior to that date, had written notice of the transfer or by any written evidence had recognized such transfer.

(c) Unless otherwise provided, a license or other authorization issued by the Office of Foreign Assets Control before, during, or after a transfer shall validate such transfer or make it enforceable to the same extent that it would be valid or enforceable but for the provisions of this part and any regulation, order, directive, ruling, instruction, or license issued pursuant to this part.

(d) Transfers of property that otherwise would be null and void or unenforceable by virtue of the provisions of this section shall not be deemed to be null and void or unenforceable as to any person with whom such property is or was held or maintained (and as to such person only) in cases in which such person is able to establish to the satisfaction of the Office of Foreign Assets Control each of the following:

(1) Such transfer did not represent a willful violation of the provisions of this part by the person with whom such property is or was held or maintained (and as to such person only);

(2) The person with whom such property is or was held or maintained did not have reasonable cause to know or suspect, in view of all the facts and circumstances known or available to such person, that such transfer required a license or authorization issued pursuant to this part and was not so licensed or authorized, or, if a license or authorization did purport to cover the transfer, that such license or authorization had been obtained by misrepresentation of a third party or withholding of material facts or was otherwise fraudulently obtained; and

(3) The person with whom such property is or was held or maintained filed with the Office of Foreign Assets Control a report setting forth in full the circumstances relating to such transfer promptly upon discovery that:

(i) Such transfer was in violation of the provisions of this part or any regulation, ruling, instruction, license, or other directive or authorization issued pursuant to this part;

(ii) Such transfer was not licensed or authorized by the Office of Foreign Assets Control; or

(iii) If a license did purport to cover the transfer, such license had been obtained by misrepresentation of a third party or withholding of material facts or was otherwise fraudulently obtained.

Note to paragraph (d) of § 560.212:

The filing of a report in accordance with the provisions of paragraph (d)(3) of this section shall not be deemed evidence that the terms of paragraphs (d)(1) and (d)(2) of this section have been satisfied.

(e) Unless licensed pursuant to this part, any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property and interests in property blocked pursuant to § 560.211.

§ 560.213 Holding of funds in interest-bearing accounts; investment and reinvestment.

(a) Except as provided in paragraphs (e) or (f) of this section, or as otherwise directed by the Office of Foreign Assets Control, any U.S. person holding funds, such as currency, bank deposits, or liquidated financial obligations, subject to § 560.211 shall hold or place such funds in a blocked interest-bearing account located in the United States.

(b)(1) For purposes of this section, the termblocked interest-bearing accountmeans a blocked account:

(i) In a Federally-insured U.S. bank, thrift institution, or credit union, provided the funds are earning interest at rates that are commercially reasonable; or

(ii) With a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78aet seq.), provided the funds are invested in a money market fund or in U.S. Treasury bills.