OFAC Updates North Korea Sanctions, Removes Outdated Regs

Simultaneously, OFAC issued a second final rule, effective June 20, 2011, which removes 31 CFR Parts 500 (the Foreign Assets Control Regulations (FACR) and 505 (the Transaction Control Regulations, TCR) as these regulations are no longer in effect with respect to North Korea.

More Comprehensive Regulations Coming, Rule Represents Immediate Guidance

Regarding the final rule on EO 13570, OFAC states that the amendments it is making to the North Korea Sanctions Regulations are being published in abbreviated form for the purpose of providing immediate guidance to the public. OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.

(OFAC adds that the appendices to the regulations that contain the EOs underlying the North Korea Sanctions Regulations will be removed when OFAC publishes a more comprehensive set of regulations.)

Adds EO 13570 Prohibitions to Regs, Refers to OFAC Licensing Procedures

The abbreviated ammendments include adding a sentence to 31 CFR 510.201 (on prohibited transactions) to state that “All transactions prohibited pursuant to Executive Order 13570 are also prohibited pursuant to this part” and including the text of EO 13570 in an appendix for reference.

The final rule also adds a new 31 CFR 510.501 (on general and specific licensing procedures) and a new 510.801 (on procedures) that add references to 31 CFR Part 501 Subpart E (on OFAC Procedures) for procedures related to licensing, including applications, amendments, modifications, revocations, etc.

2nd Rule Removes Outdated Trading with the Enemy Regulations for N. Korea

OFAC’s second final rule removes Parts 500 (FACR) and 505 (TCR) from 31 CFR Chapter V which implemented Proclamation 8271 of June 2008, which terminated the exercise of the President’s authorities under the Trading With the Enemy Act (TWEA) with respect to North Korea. The update is necessary as these regulations, to the extent promulgated under TWEA authorities, are no longer in force with respect to North Korea.

In addition, OFAC notes that the final rule on EO 13570 replaces certain provisions of the FACR promulgated under sections 73 and 74 of the Arms Export Control Act, which were the only remaining effective provisions of the FACR.

¹According to OFAC, the following restrictions were already in place for North Korea prior to the EO: (i) a ban on the import of goods of North Korean origin either directly or through third countries without a license; (ii) a prohibition on registering vessels in North Korea, etc.; (iii) prohibitions on transferring, paying, exporting, withdrawing or otherwise dealing in the property and interests in property of blocked North Korea persons; and (iv) a prohibition on exporting goods to blocked North Korean parties.

Effective April 19, 2011, EO 13570 prohibits, except to the extent provided in statutes or in licenses, regulations, orders, or directives that may be issued pursuant to the order, and notwithstanding any contract entered into or any license or permit granted prior to the date of the order, the importation into the U.S., directly or indirectly, of any goods, services, or technology from North Korea.

In addition, the EO prohibits any transaction by a U.S. person or within the U.S. 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 EO. Similarly it prohibits any conspiracy formed to violate any of the prohibitions set forth in the EO. (See ITT’s Online Archives or 04/21/11 news, 11042128, for BP summary of the EO.)

(See ITT’s Online Archives or 06/30/08 news, 08063025, for BP summary of Proclamation 8271 lifting the application of the TWEA sanctions with respect to N. Korea.)

OFAC final rule removing the outdated regulations is available here.

(FR Pub 06/22/11)