[Federal Register: August 4, 2003 (Volume 68, Number 149)]
[Rules and Regulations]
[Page 45777-45783]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04au03-4]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Parts 591 and 592
Rough Diamonds (Sierra Leone & Liberia) Sanctions Regulations;
Rough Diamonds Control Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Interim final rule.
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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of
the Treasury is amending and issuing regulations to carry out the
purposes of Executive Order 13312 of July 29, 2003, which implemented
the Clean Diamond Trade Act and the Kimberley Process Certification
Scheme for rough diamonds and amended prior Executive orders that
served as the bases for restricting or prohibiting the importation into
the United States of rough diamonds from Sierra Leone or Liberia.
DATES: Effective Date: July 30, 2003.
Comments: Written comments must be received no later than October
3, 2003.
ADDRESSES: Comments may be submitted to the Chief of Records, ATTN:
Request for Comments, Office of Foreign Assets Control, Department of
the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.
Alternatively, comments may be submitted via facsimile to the Chief of
Records at 202/622-1657 or via OFAC's Web site (http://www.treas.gov/offices/enforcement/ofac/comment.html
).
FOR FURTHER INFORMATION CONTACT: OFAC's Chief of Policy Planning and
Program Management, tel.: 202/622-2500, or Chief Counsel, tel.: 202/
622-2410.
SUPPLEMENTARY INFORMATION:
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FAC.'' Paper copies of this document can be obtained by calling the
Government Printing Office at 202-512-1530. Additional information
concerning the programs of the Office of Foreign Assets Control is
available for download from the Office's Internet Home Page at: http://www.treas.gov/ofac
or via FTP at ofacftp.treas.gov. Facsimiles of
information are available through the Office's 24-hour fax-on-demand
service: call 202/622-0077 using a fax machine, a fax modem, or (within
the United States) a touch-tone telephone.
Background
On July 29, 2003, the President issued Executive Order 13312,
taking into account enactment of the Clean Diamond Trade Act (Pub. L.
108-19), which implements the multilateral Kimberley Process
Certification Scheme for rough diamonds (KPCS), and recent developments
in Sierra Leone and Liberia. The Clean Diamond Trade Act requires the
President, subject to certain waiver authorities, to prohibit the
importation into, and exportation from, the United States of any rough
diamond not controlled through the KPCS. This means shipments of rough
diamonds between the United States and non-Participants in the KPCS
generally are prohibited, and shipments between the United States and
Participants are permitted only if they are handled in accordance with
the standards, practices, and procedures of the KPCS set out in these
regulations. Executive Order 13312 implemented the Clean Diamond Trade
Act and the KPCS and amended Executive Orders 13194 and 13213, which
are described below.
On January 18, 2001, the President issued Executive Order 13194 (66
FR 7389, Jan. 23, 2001), taking into account United Nations Security
Council Resolution (UNSCR) 1306 of July 5, 2000. This order declared a
national emergency in response to the role played by the illicit trade
in diamonds in fueling conflict and human rights violations in Sierra
Leone (RUF) and prohibited the importation into the United States of
rough diamonds from Sierra Leone that were not controlled by the
Government of Sierra Leone through its Certificate of Origin regime.
On May 22, 2001, the President issued Executive Order 13213 (66 FR
28829, May 24, 2001), taking into account UNSCR 1343 of March 7, 2001.
This order expanded the scope of the national emergency declared in
Executive Order 13194 to respond to, among other things, the Government
of Liberia's complicity in the illicit trade in rough diamonds through
Liberia. Executive Order 13213 prohibited the direct or indirect
importation into the United States of all rough diamonds from Liberia,
whether or not such diamonds originated in Liberia.
The United Nations Security Council decided to allow the ban
against the importation of rough diamonds from Sierra Leone without a
certificate of origin to expire on June 4, 2003, taking into account
the Government of Sierra Leone's increased efforts to control and
manage its diamond industry and ensure proper control over diamond
mining areas, as well as the Government's full participation in the
KPCS. In addition, however, on May 6, 2003, the Security Council
renewed for one year the absolute import ban on rough diamonds from
Liberia based on evidence that the Government of Liberia continues to
breach the measures imposed by UNSCR 1343 (2001).
Executive Order 13312 authorized the Secretary of the Treasury to
promulgate rules and regulations as may be necessary to carry out the
purposes of the order. To implement the order, the Office of Foreign
Assets Control, acting pursuant to delegated authority, is issuing the
Rough Diamonds Control Regulations and revising the Rough Diamonds
(Sierra Leone & Liberia) Sanctions Regulations.
[[Page 45778]]
Amendments to Part 591--Rough Diamonds (Sierra Leone & Liberia)
Sanctions Regulations
Section 591.201 of subpart B of the regulations, prohibiting the
importation of rough diamonds from Sierra Leone and Liberia, is revised
to implement section 3 of Executive Order 13312, which amended
Executive Order 13194 to control rough diamonds from Sierra Leone
through the KPCS and also amended Executive Order 13213 to remove
licensing and other authorities with respect to rough diamonds from
Liberia. As revised, the prohibition in Sec. 591.201 is limited in
scope to rough diamonds from Liberia and is not subject to possible
licensing or other administrative action. A note is added to Sec.
591.201 to refer the reader to new part 592, which now controls the
importation into, and the exportation from, the United States of rough
diamonds from Sierra Leone and other countries.
Section 591.301 of subpart C is removed to reflect the removal of
Sierra Leonean rough diamonds from the scope of part 591 and the
replacement of the certificate of origin regime of the Government of
Sierra Leone with the KPCS in new part 592. Section 591.302, defining
the term effective date, is revised to delete the reference to Sierra
Leone. Section 591.306 is revised to reflect the KPCS definition of the
term rough diamond. Section 591.308 is revised to delete the references
to Sierra Leone in the term rough diamonds from Sierra Leone and
Liberia. Section 591.309 is revised to conform the definition of the
term ``United States'' to section 3(10) of the Clean Diamond Trade Act.
Section 591.404 of subpart D, relating to the transshipment or
transit of rough diamonds through the United States, is revised to
delete the reference to rough diamonds from Sierra Leone. Sections
591.405 and 591.406, relating to the direct or indirect importation of
rough diamonds and the importation into and release from a bonded
warehouse or foreign trade zone of rough diamonds are revised to delete
the references to Sierra Leone.
New Part 592--Rough Diamonds Control Regulations
Section 592.201(a) of subpart B of the regulations implements
section 1(a) of Executive Order 13312, which implements section 4(a) of
the Clean Diamond Trade Act and the KPCS. Section 592.201(a) prohibits,
subject to possible exceptions described below, the importation into,
or exportation from, the United States of any rough diamond, from
whatever source, on or after July 30, 2003, unless the rough diamond is
controlled through the KPCS. Section 592.201(b) implements section 4(b)
of the Clean Diamond Trade Act by excepting from the prohibitions of
Sec. 592.201(a) importations from, or exportations to, any country
with respect to which the Secretary of State has waived the
prohibitions pursuant to section 4(b) of the Clean Diamond Trade Act
and section 2(a)(i) of Executive Order 13312.
Section 592.202 implements section 1(b) of Executive Order 13312 by
prohibiting any transaction by a United States person or within the
United States that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in
section 1 of the order. Section 592.202 also implements section 1(c) of
the order by prohibiting any conspiracy formed to violate any of the
prohibitions of the order.
Subpart C of part 592 provides definitions of terms used in the
regulations, including exporting authority, importing authority,
Kimberley Process Certificate, Kimberley Process Certification Scheme,
and rough diamond. Subpart D sets forth interpretive guidance with
respect to the regulations. For example, Sec. Sec. 592.403 and 592.404
provide guidance with respect to the transshipment or transit through
the United States of rough diamonds and the importation into and
release of rough diamonds from a bonded warehouse or foreign trade
zone, respectively.
Subpart E of part 592 sets forth provisions relating to required
records and reports. Penalties for violations of the regulations are
described in subpart F of the regulations.
Request for Comments; Procedural Requirements
Because the regulations involve a foreign affairs function, the
provisions of Executive Order 12866 and the Administrative Procedure
Act (5 U.S.C. 553) (the ``APA'') requiring notice of proposed
rulemaking, opportunity for public participation, and delay in
effective date are inapplicable. However, because of the importance of
the issues addressed in these regulations, this rule is being issued in
interim form and comments will be considered in the development of
final regulations. Accordingly, the Department encourages interested
persons who wish to comment to do so at the earliest possible time to
permit the fullest consideration of their views. Comments may address
the impact of the regulations on the submitter's activities, whether of
a commercial, non-commercial or humanitarian nature, as well as changes
that would improve the clarity and organization of the regulations.
The period for submission of comments will close October 3, 2003.
The Department will consider all comments received before the close of
the comment period in developing final regulations. Comments received
after the end of the comment period will be considered if possible, but
their consideration cannot be assured. The Department will not accept
public comments accompanied by a request that a part or all of the
submission be treated confidentially because of its business
proprietary nature or for any other reason. The Department will return
any such submission to the originator without considering it in the
development of final regulations. In the interest of accuracy and
completeness, the Department requires comments in written form.
All public comments on these regulations will be a matter of public
record. Copies of the public record concerning these regulations will
be made available not sooner than November 3, 2003 and will be
obtainable from OFAC's Web site (http://www.treas.gov/ofac). If that
service is unavailable, written requests for copies may be sent to:
Office of Foreign Assets Control, U.S. Department of the Treasury, 1500
Pennsylvania Ave., NW, Washington, DC 20220, Attn: Chief of Records
Division.
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 regulations are
contained in 31 CFR part 501 (the ``Reporting and Procedures
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44
U.S.C. 3507), those collections of information have been previously
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
31 CFR Part 591
Administrative practice and procedure, Blocking, Certificate of
origin, Conflict diamonds, Diamonds, Exports, Exporting authority,
Foreign
[[Page 45779]]
trade, Importing authority, Imports, Kimberley Process, Liberia,
Penalties, Reporting and recordkeeping requirements, Rough diamonds,
Sierra Leone.
31 CFR Part 592
Administrative practice and procedure, Foreign trade, Exports,
Imports, Kimberley Process, Penalties, Reporting and recordkeeping
requirements, Rough diamond.
0
For the reasons set forth in the preamble, 31 CFR chapter V, part 591
is amended and part 592 is added as follows:
0
1. The title for part 591 is revised to read as follows:
PART 591--ROUGH DIAMONDS (LIBERIA) SANCTIONS REGULATIONS
0
2. The authority citation for part 591 is revised to read as follows:
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 22 U.S.C. 287c; 50
U.S.C. 1601-1641, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28
U.S.C. 2461 note); E.O. 13194, 66 FR 7389 (January 23, 2001); E.O.
13213, 66 FR 28829 (May 24, 2001); E.O. 13312 (FR vol. 68, no. 147,
July 31, 2003).
Subpart B--Prohibitions
0
3. Section 591.201 is revised to read as follows:
Sec. 591.201 Prohibited importation of any rough diamond.
Notwithstanding the existence of any rights or obligations
conferred or imposed by any contract entered into or any license or
permit granted prior to the effective date, the direct or indirect
importation into the United States, on or after the effective date, of
any rough diamond from Liberia is prohibited.
Note to Sec. 591.201. See part 592 of this chapter for
additional regulations controlling the importation into the United
States of any rough diamond from any country other than Liberia, as
well as the exportation from the United States of any rough diamond
from any source.
Sec. 591.202 [Removed and reserved]
0
4. Section 591.202 is removed and reserved.
Subpart C--General Definitions
Sec. 591.301 [Removed and reserved]
0
5. Section 591.301 is removed and reserved.
0
6. Section 591.302 is revised to read as follows:
Sec. 591.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part, which is
12:01 a.m., eastern daylight time, May 23, 2001.
0
7. Section 591.307 is revised to read as follows:
Sec. 591.307 Rough diamond.
The term rough diamond means any diamond that is unworked or simply
sawn, cleaved, or bruted, and classifiable under subheading 7102.10,
7102.21, or 7102.31 of the Harmonized Tariff Schedule of the United
States.
0
8. Section 591.308 is revised to read as follows:
Sec. 591.308 Rough diamond from Liberia.
The term rough diamond from Liberia means any rough diamond
extracted in Liberia and any rough diamond that has physically entered
the territory of Liberia, regardless of where it had been extracted.
Subpart D--Interpretations
0
9. Section 591.404 is revised to read as follows:
Sec. 591.404 Transshipment or transit through the United States
prohibited.
The prohibition in Sec. 591.201 applies to the importation into
the United States, for transshipment or transit, of any rough diamond
from Liberia that is intended or destined for any country other than
the United States.
0
10. Section 591.405 is revised to read as follows:
Sec. 591.405 Direct or indirect importation of any rough diamond from
Liberia.
The prohibition in Sec. 591.201 applies to the importation of any
rough diamond from Liberia whether the rough diamond is being imported
directly into the United States from Liberia, or indirectly through any
other country.
0
11. Section 591.406 is revised to read as follows:
Sec. 591.406 Importation into or release of any rough diamond from a
bonded warehouse or foreign trade zone.
The prohibition in Sec. 591.201 applies to the importation into or
release of any rough diamond from a bonded warehouse or foreign trade
zone of the United States. However, Sec. 591.201 does not prohibit the
release from a bonded warehouse or a foreign trade zone of any rough
diamond from Liberia that was imported into the bonded warehouse or
foreign trade zone prior to the effective date.
0
12. Part 592 is added to 31 CFR Chapter V to read as follows:
PART 592--ROUGH DIAMONDS CONTROL REGULATIONS
Subpart A--Relation of This Part to Other Laws and Regulations
Sec.
592.101 Relation of this part to other laws and regulations.
Subpart B--Prohibitions
592.201 Prohibited importation and exportation of any rough diamond;
permitted importation and exportation of any rough diamond.
592.202 Evasions; attempts; conspiracies.
Subpart C--General Definitions
592.301 Controlled through the Kimberley Process Certification
Scheme.
592.302 Effective date.
592.303 Entity.
592.304 Exporting authority.
592.305 Importation into the United States.
592.306 Importing authority.
592.307 Kimberley Process Certificate.
592.308 Participant.
592.309 Person.
592.310 Rough diamond.
592.311 United States.
592.312 United States person; U.S. person.
Subpart D--Interpretations
592.401 Reference to amended sections.
592.402 Effect of amendment.
592.403 Transshipment or transit through the United States.
592.404 Importation into or release from a bonded warehouse or
foreign trade zone.
Subpart E--Records and Reports
592.501 Records and reports.
Subpart F--Penalties
592.601 Penalties.
592.602 Prepenalty notice.
592.603 Response to prepenalty notice; informal settlement.
592.604 Penalty imposition or withdrawal.
592.605 Administrative collection; referral to United States
Department of Justice.
Subpart G--Procedures
592.701 Procedures.
592.702 Delegation by the Secretary of the Treasury.
Subpart H--Paperwork Reduction Act
592.801 Paperwork Reduction Act notice.
Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 22 U.S.C. 287c; 50
U.S.C. 1601-1641, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28
U.S.C. 2461 note); Pub. L. 108-19; E.O. 12865, 58 FR 51005, 3 CFR,
1993 Comp., p. 636; E.O. 13098, 63 FR 44771, 3 CFR, 1998 Comp., p.
206; E.O. 13194, 66 FR 7389 (January 23, 2001); E.O. 13213, 66 FR
28829 (May 24, 2001); E.O. 13312 (FR vol. 68, no. 147, July 31,
2003).
Subpart A--Relation of This Part to Other Laws and Regulations
Sec. 592.101 Relation of this part to other laws and regulations.
This part is separate from, and independent of, the other parts of
this
[[Page 45780]]
chapter, with the exception of part 501 of this chapter, the
recordkeeping and reporting requirements and 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.
Subpart B--Prohibitions
Sec. 592.201 Prohibited importation and exportation of any rough
diamond; permitted importation or exportation of any rough diamond.
(a) Except to the extent provided in paragraph (b) of this section,
and notwithstanding the existence of any rights or obligations
conferred or imposed by any contract entered into or any license or
permit granted prior to the effective date, the importation into, or
exportation from, the United States on or after July 30, 2003, of any
rough diamond, from whatever source, is prohibited, unless the rough
diamond has been controlled through the Kimberley Process Certification
Scheme.
(b) The prohibitions in paragraph (a) of this section regarding the
importation into, or exportation from, the United States of any rough
diamond not controlled through the Kimberley Process Certification
Scheme do not apply to an importation from, or exportation to, any
country with respect to which the Secretary of State has granted a
waiver pursuant to section 4(b) of the Clean Diamond Trade Act (Pub. L.
108-19) and section 2(a)(1) of Executive Order 13312.
Note to Sec. 592.201. An importation of any rough diamond from,
or an exportation of any rough diamond to, a non-Participant is not
controlled through the Kimberley Process Certification Scheme and
thus is not permitted except in the following circumstance. The
Secretary of State may, pursuant to section 4(b) of the Clean
Diamond Trade Act, waive the prohibitions contained in section 4(a)
of that Act with respect to a particular country for periods of not
more than one year each. The Secretary of State will publish a
notice in the Federal Register identifying any country with respect
to which a waiver applies and specifying the relevant time period
during which the waiver will apply.
Sec. 592.202 Evasions; attempts; conspiracies.
(a) Notwithstanding the existence of any rights or obligations
conferred or imposed by any contract entered into or any license or
permit granted prior to July 30, 2003, any transaction by a United
States person anywhere, or any transaction that occurs in whole or in
part within the United States, on or after the effective date that
evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in this part is
prohibited.
(b) Notwithstanding the existence of any rights or obligations
conferred or imposed by any contract entered into or any license or
permit granted prior to July 30, 2003, any conspiracy formed to violate
any of the prohibitions of this part is prohibited.
Subpart C--General Definitions
Sec. 592.301 Controlled through the Kimberley Process Certification
Scheme.
(a) Except as otherwise provided in paragraph (b) of this section,
the term controlled through the Kimberley Process Certification Scheme
refers to the following requirements that apply, as appropriate, to the
importation into the United States from a Participant, or the
exportation from the United States to a Participant, of any shipment
including any rough diamond:
(1) Kimberley Process Certificate. A shipment of rough diamonds
imported into, or exported from, the United States must be accompanied
by a Kimberley Process Certificate. The certificate must be presented
in connection with an importation or exportation of rough diamonds if
demanded by Customs officials.
(2) Tamper-Resistant Container. A shipment of rough diamonds
imported into, or exported, from the United States must be sealed in a
tamper-resistant container;
(3) Notification Requirements for Importations into the United
States. The importer of record in the United States must confirm
receipt of a shipment of rough diamonds to the relevant foreign
exporting authority. The confirmation must refer to the relevant
Kimberley Process Certificate by serial number, the number of parcels,
the carat weight, and the details of the importer and exporter; and
(4) Validation of Kimberley Process Certificate for Exportations
from the United States. With respect to the exportation of rough
diamonds from the United States and regardless of the destination, the
Census Bureau requires the filing of export information through the
Automated Export System. Submission of export information through the
Automated Export System must be done in advance and must be confirmed
by the return of an Internal Transaction Number. The return to the
filer of the Internal Transaction Number shall constitute the
validation of the Kimberley Process Certificate for an exportation of
rough diamonds from the United States to a Participant. The exporter is
required to report the Internal Transaction Number on the Kimberley
Process Certificate accompanying any exportation from the United
States. The Internal Transaction Number is a unique confirmation number
generated by the Automated Export System to the filer who provides in a
timely manner the complete commodity shipment data when such data have
been accepted by the system.
(b) The Secretary of State, consistent with section 3(2)(b) of the
Clean Diamond Trade Act (Pub. L. 108-19), may modify the requirements
set forth in paragraph (a) of this section upon making a determination
that a Participant has established an alternative system of control for
rough diamonds that meets substantially the standards, practices, and
procedures of the Kimberley Process Certification Scheme.
Note 1 to Sec. 592.301. The Secretary of State will
periodically publish in the Federal Register an up-to-date listing
of all Participants. Where appropriate, such listing also will
describe any modification of the requirements set forth in paragraph
(a) of this section.
Note 2 to Sec. 592.301. The recordkeeping and reporting
requirements imposed by Sec. 592.501 apply to all U.S. persons
engaged in the importation into, or exportation from, the United
States of any shipment of rough diamonds.
Sec. 592.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part, which is
12:01 a.m., eastern daylight time, July 30, 2003.
Sec. 592.303 Entity.
The term entity means a partnership, association, trust, joint
venture, corporation, or other organization.
Sec. 592.304 Exporting authority.
(a) The term exporting authority means one or more entities
designated by a Participant from whose territory a shipment of rough
diamonds is being exported as having the authority to validate the
Kimberley Process Certificate.
[[Page 45781]]
(b) The exporting authority for the United States is the Bureau of
the Census.
Note to Sec. 592.304. The Secretary of State will periodically
publish in the Federal Register an up-to-date listing of the
exporting authorities of all Participants.
Sec. 592.305 Importation into the United States.
The term importation into the United States means the bringing of
goods into the United States.
Sec. 592.306 Importing authority.
(a) The term importing authority means one or more entities
designated by a Participant into whose territory a shipment of rough
diamonds is being imported as having the authority to enforce the laws
and regulations of the Participant regulating imports, including the
verification of the Kimberley Process Certificate accompanying the
shipment.
(b) The importing authorities for the United States are the United
States Bureau of Customs and Border Protection or, in the case of a
territory or possession of the United States with its own customs
administration, analogous officials.
Note to Sec. 592.306. The Secretary of State will periodically
publish in the Federal Register an up-to-date listing of the
importing authorities of all Participants.
Sec. 592.307 Kimberley Process Certificate.
The term Kimberley Process Certificate means a tamper- and forgery-
resistant document that bears the following information in any
language, provided that an English translation is incorporated:
(a) The title ``Kimberley Process Certificate'' and the statement:
``The rough diamonds in this shipment have been handled in accordance
with the provisions of the Kimberley Process Certification Scheme for
rough diamonds'';
(b) Country of origin for shipment of parcels of unmixed (i.e.,
from the same) origin;
(c) Unique numbering with the Alpha 2 country code, according to
ISO 3166-1;
(d) Date of issuance;
(e) Date of expiry;
(f) Name of issuing authority;
(g) Identification of exporter and importer;
(h) Carat weight/mass;
(i) Value in U.S. dollars;
(j) Number of parcels in the shipment;
(k) Relevant Harmonized Commodity Description and Coding System;
and
(l) Validation by the exporting authority.
Note to Sec. 592.307. See Sec. 592.301(a)(4) for procedures
governing the validation of the Kimberley Process Certificate when
exporting from the United States.
Sec. 592.308 Participant.
The term Participant means a state, customs territory, or regional
economic integration organization identified by the Secretary of State
as one for which rough diamonds are controlled through the Kimberley
Process Certification Scheme.
Note to Sec. 592.308. The Secretary of State will periodically
publish in the Federal Register an up-to-date listing of all
Participants.
Sec. 592.309 Person.
The term person means an individual or entity.
Sec. 592.310 Rough diamond.
The term rough diamond means any diamond that is unworked or simply
sawn, cleaved, or bruted and classifiable under subheading 7102.10,
7102.21, or 7102.31 of the Harmonized Tariff Schedule of the United
States.
Sec. 592.311 United States.
The term United States, when used in the geographic sense, means
the several States, the District of Columbia, and any commonwealth,
territory, or possession of the United States.
Sec. 592.312 United States person; U.S. person.
The term United States person or U.S. person means any United
States citizen; any alien admitted for permanent residence into the
United States; any entity organized under the laws of the United States
or any jurisdiction within the United States (including its foreign
branches); or any person in the United States.
Subpart D--Interpretations
Sec. 592.401 Reference to amended sections.
Except as otherwise specified, reference to any provision in this
part or chapter or to any other regulation refers to the same as
currently amended.
Sec. 592.402 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 order, regulation, ruling, or instruction
issued by or under the direction of the Director of the Office of
Foreign Assets Control does not affect any act done or omitted, or any
civil or criminal suit or proceeding commenced or pending prior to such
amendment, modification, or revocation. All penalties, forfeitures, and
liabilities under any such order, regulation, ruling, or instruction
continue and may be enforced as if such amendment, modification, or
revocation had not been made.
Sec. 592.403 Transshipment or transit through the United States.
The prohibitions in Sec. 592.201 apply to the importation into, or
exportation from, the United States, for transshipment or transit, of
any rough diamond intended or destined for any country other than the
United States unless the shipment is sealed in a tamper-resistant
container, accompanied by a Kimberley Process Certificate, and leaves
the United States in an identical state as it entered. The validation,
recordkeeping, and confirmation procedures applicable to importations
and exportations do not apply in this case.
Sec. 592.404 Importation into or release from a bonded warehouse or
foreign trade zone.
The requirements of the Kimberley Process Certification Scheme
apply to all imported shipments of a rough diamond, regardless of
whether they are destined for entry into, or withdrawal from, a bonded
warehouse or a foreign trade zone of the United States.
Subpart E--Records and Reports
Sec. 592.501 Records and reports.
(a) Any United States person seeking to export from or import into
the United States any rough diamond shall keep a full record of, in the
form of reports or otherwise, complete information relating to any act
or transaction to which any prohibition imposed under Sec. 592.201(a)
applies. Such record shall be available for examination for at least 5
years after the date of such act or transaction.
(b) Every United States person is required to furnish under oath,
in the form of reports or otherwise, from time to time and at any time
as may be required by the Director, Office of Foreign Assets Control,
complete information relative to any act or transaction subject to the
provisions of this part. The Director may require that such reports
include the production of books of account, records, contracts,
letters, memoranda, or other papers in the custody or control of
persons required to make such reports. Reports with respect to any acts
or transactions may be required either before or after such acts or
transactions are completed.
[[Page 45782]]
Subpart F--Penalties
Sec. 592.601 Penalties.
(a) Attention is directed to section 8 of the Clean Diamond Trade
Act (the ``Act'') (Pub. L. 108-19), which provides that:
(1) A civil penalty not to exceed $10,000 per violation may be
imposed on any person who violates, or attempts to violate, any order
or regulation issued under the Act;
(2) Whoever willfully violates, or willfully attempts to violate,
any order or regulation issued under this Act shall, upon conviction,
be fined not more than $50,000, or, if a natural person, may be
imprisoned for not more than 10 years, or both; and any officer,
director, or agent of any corporation who willfully participates in
such violation may be punished by a like fine, imprisonment, or both;
and
(3) Those customs laws of the United States, both civil and
criminal, including those laws relating to seizure and forfeiture, that
apply to articles imported in violation of such laws shall apply with
respect to any rough diamond imported in violation of the Act.
Note to paragraph (a). As reflected in paragraphs (a)(1) and (2)
above, section 8(a) of the Clean Diamond Trade Act (Pub. L. 108-19)
establishes penalties with respect to any violation of any
regulation issued under the Act. OFAC prepenalty, penalty, and
administrative collection procedures relating to such violations are
set forth below in Sec. Sec. 592.602 through 592.605. Section 8(c)
of the Act also authorizes the United States Bureau of Customs and
Border Protection and the United States Bureau of Immigration and
Customs Enforcement, as appropriate, to enforce the penalty
provisions set forth in paragraph (a) and to enforce the laws and
regulations governing exports of rough diamonds, including with
respect to the validation of the Kimberley Process Certificate by
the Bureau of the Census. The OFAC civil penalty procedures set
forth below are separate from, and independent of, any penalty
procedures that may be followed by the United States Bureau of
Customs and Border Protection and the United States Bureau of
Immigration and Customs Enforcement in their exercise of the
authorities set forth in section 8(c) of the Clean Diamond Trade
Act.
(b) The criminal penalties provided in the Act are subject to
increase pursuant to 18 U.S.C. 3571.
(c) 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, or imprisoned not more than
five years, or both.
(d) Violations of this part may also be subject to relevant
provisions of other applicable laws.
Sec. 592.602 Prepenalty notice.
(a) When required. If the Director of the Office of Foreign Assets
Control has reasonable cause to believe that there has occurred a
violation of any provision of this part or a violation of the
provisions of any regulation or order issued by or pursuant to the
direction or authorization of the Secretary of the Treasury pursuant to
this part or otherwise under the Clean Diamond Trade Act, and the
Director determines that further proceedings are warranted, the
Director shall notify the alleged violator of the agency's intent to
impose a monetary penalty by issuing a prepenalty notice. The
prepenalty notice shall be in writing. The prepenalty notice may be
issued whether or not another agency has taken any action with respect
to the matter.
(b) Contents of notice--(1) Facts of violation. The prepenalty
notice shall describe the violation, specify the laws and regulations
allegedly violated, and state the amount of the proposed monetary
penalty.
(2) Right to respond. The prepenalty notice also shall inform the
respondent of the respondent's right to make a written presentation
within the applicable 30-day period set forth in Sec. 592.703 as to
why a monetary penalty should not be imposed or why, if imposed, the
monetary penalty should be in a lesser amount than proposed.
(c) Informal settlement prior to issuance of prepenalty notice. At
any time prior to the issuance of a prepenalty notice, an alleged
violator may request in writing that, for a period not to exceed sixty
(60) days, the agency withhold issuance of the prepenalty notice for
the exclusive purpose of effecting settlement of the agency's potential
civil monetary penalty claims. In the event the Director grants the
request, under terms and conditions within his discretion, the Office
of Foreign Assets Control will agree to withhold issuance of the
prepenalty notice for a period not to exceed 60 days and will enter
into settlement negotiations of the potential civil monetary penalty
claim.
Sec. 592.603 Response to prepenalty notice; informal settlement.
(a) Deadline for response. The respondent may submit a response to
the prepenalty notice within the applicable 30-day period set forth in
this paragraph. The Director may grant, at his discretion, an extension
of time in which to submit a response to the prepenalty notice. The
failure to submit a response within the applicable time period set
forth in this paragraph shall be deemed to be a waiver of the right to
respond.
(1) Computation of time for response. A response to the prepenalty
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 prepenalty notice
was mailed. If the respondent refused delivery or otherwise avoided
receipt of the prepenalty notice, a response must be postmarked or
date-stamped on or before the 30th day after the date on the stamped
postal receipt maintained at the Office of Foreign Assets Control. If
the prepenalty notice was personally delivered to the respondent by a
non-U.S. Postal Service agent authorized by the Director, a response
must be postmarked or date-stamped on or before the 30th day after the
date of delivery.
(2) 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 Director's discretion, only upon the respondent's specific
request to the Office of Foreign Assets Control.
(b) Form and method of response. The response must be submitted in
typewritten form and signed by the respondent or a representative
thereof. The response need not be in any particular form. A copy of the
response may be sent by facsimile, but the original also must be sent
to the Office of Foreign Assets Control Civil Penalties Division by
mail or courier and must be postmarked or date-stamped, in accordance
with paragraph (a) of this section.
(c) Contents of response. A written response must contain
information sufficient to indicate that it is in response to the
prepenalty notice and must identify the Office of Foreign Assets
Control identification number listed on the prepenalty notice.
(1) A written response must include the respondent's full name,
address, telephone number, and facsimile
[[Page 45783]]
number, if available, or those of the representative of the respondent.
(2) A written response should either admit or deny each specific
violation alleged in the prepenalty notice and also state if the
respondent has no knowledge of a particular violation. If the written
response fails to address any specific violation alleged in the
prepenalty notice, that alleged violation shall be deemed to be
admitted.
(3) A written response should include any information in defense,
evidence in support of an asserted defense, or other factors that the
respondent requests the Office of Foreign Assets Control to consider.
Any defense or explanation previously made to the Office of Foreign
Assets Control or any other agency must be repeated in the written
response. Any defense not raised in the written response will be
considered waived. The written response also should set forth the
reasons why the respondent believes the penalty should not be imposed
or why, if imposed, it should be in a lesser amount than proposed.
(d) Failure to respond. Where OFAC receives no response to a
prepenalty notice within the applicable time period set forth in
paragraph (a) of this section, a penalty notice generally will be
issued, taking into account the mitigating and/or aggravating factors
present in the record. If there are no mitigating factors present in
the record, or the record contains a preponderance of aggravating
factors, the proposed prepenalty amount generally will be assessed as
the final penalty.
(e) Informal settlement. In addition to or as an alternative to a
written response to a prepenalty notice, the respondent or respondent's
representative may contact the Office of Foreign Assets Control as
advised in the prepenalty notice to propose the settlement of
allegations contained in the prepenalty notice and related matters.
However, the requirements set forth in paragraph (f) of this section as
to oral communication by the representative must first be fulfilled. In
the event of settlement at the prepenalty stage, the claim proposed in
the prepenalty notice will be withdrawn, the respondent will not be
required to take a written position on allegations contained in the
prepenalty notice, and the Office of Foreign Assets Control will make
no final determination as to whether a violation occurred. The amount
accepted in settlement of allegations in a prepenalty notice may vary
from the civil penalty that might finally be imposed in the event of a
formal determination of violation. In the event no settlement is
reached, the time limit specified in paragraph (a) of this section for
written response to the prepenalty notice will remain in effect unless
additional time is granted by the Office of Foreign Assets Control.
(f) Representation. A representative of the respondent may act on
behalf of the respondent, but any oral communication with the Office of
Foreign Assets Control prior to a written submission regarding the
specific allegations contained in the prepenalty notice must be
preceded by a written letter of representation, unless the prepenalty
notice was served upon the respondent in care of the representative.
Sec. 592.604 Penalty imposition or withdrawal.
(a) No violation. If, after considering any response to the
prepenalty notice and any relevant facts, the Director of the Office of
Foreign Assets Control determines that there was no violation by the
respondent named in the prepenalty notice, the Director shall notify
the respondent in writing of that determination and of the cancellation
of the proposed monetary penalty.
(b) Violation. (1) If, after considering any written response to
the prepenalty notice, or default in the submission of a written
response, and any relevant facts, the Director of the Office of Foreign
Assets Control determines that there was a violation by the respondent
named in the prepenalty notice, the Director is authorized to issue a
written penalty notice to the respondent of the determination of the
violation and the imposition of the monetary penalty.
(2) The penalty notice shall inform the respondent that payment or
arrangement for installment payment of the assessed penalty must be
made within 30 days of the date of mailing of the penalty notice by the
Office of Foreign Assets Control.
(3) The penalty notice shall inform the respondent of the
requirement to furnish the respondent's taxpayer identification number
pursuant to 31 U.S.C. 7701 and that such number will be used for
purposes of collecting and reporting on any delinquent penalty amount.
(4) The issuance of the penalty notice finding a violation and
imposing a monetary penalty shall constitute final agency action. The
respondent has the right to seek judicial review of that final agency
action in federal district court.
Sec. 592.605 Administrative collection; referral to United States
Department of Justice.
In the event that the respondent does not pay the penalty imposed
pursuant to this part or make payment arrangements acceptable to the
Director of the Office of Foreign Assets Control within 30 days of the
date of mailing of the penalty notice, 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 G--Procedures
Sec. 592.701 Procedures.
For procedures relating to 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.
Sec. 592.702 Delegation by the Secretary of the Treasury.
Any action that the Secretary of the Treasury is authorized to take
pursuant to Executive Order 13312 (FR vol. 68, No. 147, July 31, 2003)
and any further Executive orders relating to the Clean Diamond Trade
Act (Pub. L. 108-19) may be taken by the Director of the Office of
Foreign Assets Control or by any other person to whom the Secretary of
the Treasury has delegated authority so to act.
Subpart H--Paperwork Reduction Act
Sec. 592.801 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 and
other procedures, see Sec. 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: July 30, 2003.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: July 30, 2003.
Juan C. Zarate,
Deputy Assistant Secretary (Terrorist Financing and Financial Crimes),
Department of the Treasury.
[FR Doc. 03-19821 Filed 7-30-03; 4:19 pm]
BILLING CODE 4810-25-P