OFAC Codifies North Korea Sanctions Regulations
The Office of Foreign Assets Control has issued a final rule, effective November 4, 2010, which adds a new Part 510, the “North Korea Sanctions Regulations” to 31 CFR.
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OFAC is issuing these regulations in order to further implement Executive Orders 13466 and 13551, which, among other things, block all property and interests in property of certain persons and entities that support the Government of North Korea1. (See ITT's Online Archives or 06/30/08 and 08/31/10 news, 08063025 and 10083107, for BP summaries of these EOs, respectively.)
New Regs List Prohibited Transactions, Interpretations, Authorizations, Etc.
The contents of new 31 CFR Part 510 are:
Subpart A--Relation of This Part to Other Laws and Regulations
510.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
510.201 Prohibited transactions.
510.202 Effect of transfers violating the provisions of this part.
510.203 Holding of funds in interest-bearing accounts; investment and reinvestment.
Subpart C--General Definitions
510.301 Blocked account; blocked property.
510.302 Effective date.
510.303 Entity.
510.304 Interest.
510.305 Licenses; general and specific.
510.306 Person.
510.307 Property; property interest.
510.308 Transfer.
510.309 United States.
510.310 U.S. financial institution.
510.311 United States person; U.S. person.
Subpart D--Interpretations
510.402 Effect of amendment.
510.403 Termination and acquisition of an interest in blocked property.
510.404 Transactions ordinarily incident to a licensed transaction authorized.
510.405 Setoffs prohibited.
510.406 Entities owned by a person whose property and interests in property are blocked.
Subpart E--Licenses, Authorizations, and Statements of Licensing Policy
510.503 Exclusion from licenses.
510.504 Payments and transfers to blocked accounts in U.S. financial institutions.
510.505 Entries in certain accounts for normal service charges authorized.
510.506 Provision of certain legal services authorized.
510.507 Authorization of emergency medical services.
Subpart H--Procedures
510.802 Delegation by the Secretary of the Treasury.
Regs Published in Abbreviated Form, to be Supplemented
OFAC states that the regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement 31 CFR Part 510 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.
Prohibitions Under EOs 13466 and 13551
An overview of the Executive Orders that are codified in this final rule includes the following provisions:
EO 13466. EO 13466 (contained in Appendix A to OFAC's final rule) states that:
"Except to the extent provided in statutes or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted prior to the date of this order, the following are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:
All property and interests in property of North Korea or a North Korean national that, pursuant to the President's authorities under the Trading with the Enemy Act (TWEA)…were blocked as of June 16, 2000, and remained blocked immediately prior to the date of this order."
EO 13551. Among other things, EO 13551 (contained in Appendix B to OFAC's final rule) states that:
"(a) 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 overseas branch, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:
(i) the persons listed in the Annex to this order; and
(ii) any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:
(A) to have, directly or indirectly, imported, exported, or reexported to, into, or from North Korea any arms or related materiel;
(B) to have, directly or indirectly, provided training, advice, or other services or assistance, or engaged in financial transactions, related to the manufacture, maintenance, or use of any arms or related materiel to be imported, exported, or reexported to, into, or from North Korea, or following their importation, exportation, or reexportation to, into, or from North Korea;
(C) to have, directly or indirectly, imported, exported, or reexported luxury goods to or into North Korea;
(D) to have, directly or indirectly, engaged in money laundering, the counterfeiting of goods or currency, bulk cash smuggling, narcotics trafficking, or other illicit economic activity that involves or supports the Government of North Korea or any senior official thereof;
(E) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the activities described in subsections (a)(ii)(A)--(D) of this section or any person whose property and interests in property are blocked pursuant to this order;
(F) 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 this order; or
(G) to have attempted to engage in any of the activities described in subsections (a)(ii)(A)--(F) of this section."
1Note that North Korea is also one of only two countries subject to HTS Column 2 duty rates (the other country is Cuba).
(See ITT's Online Archives or 10/28/10 news, 10102647, for BP summary of a Congressional Research Service report that U.S.-North Korea trade is minimal, among other things.)
OFAC contact - Compliance, Outreach & Implementation (202) 622-2490