Iranian Transactions Regulations

Summary:

The Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”) is amending the Iranian Transactions Regulations to revise the definition of the term Iranian accounts and make conforming changes to other sections of the regulations.

Table of Contents

Dates:

Effective Date: July 23, 2009.

For further information contact:

Assistant Director for Compliance Outreach Implementation, 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, Washington, DC 20220 (not toll free numbers).

Supplementary information:

Electronic and Facsimile Availability

This document and additional information concerning the Office of Foreign Assets Control are available from OFAC's Web site (http://www.treas.gov/ofac) or 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 of October 29, 1987, issued pursuant to authorities including the International Security and Development Cooperation Act of 1985 (22 U.S.C. 2349aa-9). In that original order, after finding, inter alia, that the Government of Iran was actively supporting terrorism as an instrument of state policy, the President prohibited the importation of Iranian-origin goods and services. Subsequently, in Executive Order 12957, issued on March 15, 1995, under the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”), 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, Executive Order 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. Finally, on August 19, 1997, the President issued Executive Order 13059 consolidating and clarifying the previous orders.

Existing § 560.320 of the ITR defines the term Iranian accounts to mean accounts of persons located in Iran or of the Government of Iran maintained on the books of either a United States depository institution or a United States registered broker or dealer in securities. OFAC is revising § 560.320 to clarify the definition by substituting the new phrase “persons who are ordinarily resident in Iran, except when such persons are not located in Iran” for the phrase “persons located in Iran.” This change will improve OFAC's overall administration of the ITR and facilitate compliance by U.S. financial institutions. As revised, § 560.320 defines Iranian accounts to mean accounts of persons who are ordinarily resident in Iran, except when such persons are not located in Iran, or of the Government of Iran maintained on the books of either a United States depository institution or a United States registered broker or dealer in securities.

In addition to revising the definition in § 560.320, OFAC is making certain conforming changes to § 560.517 and §§ 560.532-560.535. These sections use language from the unamended definition of the term Iranian accounts in describing certain transactions that are authorized or prohibited with respect to such accounts. Therefore, OFAC is revising these sections by deleting that language and instead relying on a reference to the definition in § 560.320. Lastly, OFAC also is making a technical correction to the heading of § 560.532.

Public Participation

Because the amendments of the ITR involve a foreign affairs function, Executive Order 12866 and the provisions of 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 ITR 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 Office of Foreign Assets Control amends 31 CFR part 560 as follows:

Part 560—iranian transactions regulations

1. The authority citation for part 560 continues to read as follows:

Authority:

3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 2349aa-9; 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. 106-387, 114 Stat. 1549; Pub. L. 110-96, 121 Stat. 1011; 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.

Subpart c—general definitions

2. Revise § 560.320 to read as follows: § 560.320

The term Iranian accounts means accounts of persons who are ordinarily resident in Iran, except when such persons are not located in Iran, or of the Government of Iran maintained on the books of either a United States depository institution or a United States registered broker or dealer in securities.

Subpart e—licenses, authorizations and statements of licensing policy

3. In § 560.517, revise the introductory text of paragraphs (a) and (b) to read as follows: § 560.517

(a) United States depository institutions are prohibited from performing services with respect to Iranian accounts, as defined in § 560.320, except that United States depository institutions are authorized to provide and be compensated for services and incidental transactions with respect to:

* * * * *

(b) United States registered brokers or dealers in securities are prohibited from performing services with respect to Iranian accounts, as defined in § 560.320, except that United States registered brokers or dealers in securities are authorized to provide and be compensated for services and incidental transactions with respect to:

* * * * *
4. In § 560.532, revise the heading and paragraph (c) to read as follows: § 560.532 * * * * *

(c)No debits or credits to Iranian accounts on the books of U.S. depository institutions. Nothing in this section authorizes payment terms or trade financing involving debits or credits to Iranian accounts, as defined in § 560.320.

* * * * *
5. In § 560.533, revise paragraph (c) to read as follows: § 560.533 * * * * *

(c)No debits or credits to Iranian accounts on the books of U.S. depository institutions. Payment for any brokerage fee earned pursuant to this section may not involve debits or credits to Iranian accounts, as defined in § 560.320.

* * * * *
6. In § 560.534, revise paragraphs (d) and (e)(2) to read as follows: § 560.534 * * * * *

(d)Iranian accounts. Nothing in this section authorizes debits or credits to Iranian accounts, as defined in § 560.320.

(e) * * *

(2) A United States person may process a documentary collection relating to the importation into the United States of Iranian-origin pistachios, but payment under the documentary collection may not involve the crediting of an Iranian account, as defined in § 560.320.

7. In § 560.535, revise paragraph (d) to read as follows: § 560.535 * * * * *

(d)Iranian accounts. Nothing in this section authorizes debits or credits to Iranian accounts, as defined in § 560.320.

* * * * *
Dated: July 17, 2009. Adam J. Szubin,

Director, Office of Foreign Assets Control.

References

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