[Federal Register: September 23, 2004 (Volume 69, Number 184)]
[Rules and Regulations]
[Page 56936-56942]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23se04-7]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 592
Rough Diamonds Control Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
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SUMMARY: The Treasury Department's Office of Foreign Assets Control is
revising the Rough Diamonds Control Regulations previously issued as an
interim final rule. The regulations 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.
Based on its experience and that of other involved agencies, OFAC is
revising certain reporting and recordkeeping requirements of the
regulations.
DATES: Effective Date: September 23, 2004.
FOR FURTHER INFORMATION CONTACT: OFAC's Chief of Policy Planning and
Program Management, tel.: (202) 622-4855, or Chief Counsel, tel.: (202)
622-2410.
SUPPLEMENTARY INFORMATION:
Background
On July 29, 2003, the President issued Executive Order 13312, to
implement the Clean Diamond Trade Act (Pub. L. 108-19) and the
multilateral Kimberley Process Certification Scheme for rough diamonds
(KPCS). 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.
The Treasury Department's Office of Foreign Assets Control (OFAC),
acting pursuant to Executive Order 13312 and delegated authority,
published the Rough Diamonds Control Regulations, 31 CFR part 592 (the
Regulations), as an interim final rule on August 4, 2003 (68 FR 45777).
The Regulations, which are described in detail in the preamble to the
interim final rule, implement the Clean Diamond Trade Act and the KPCS.
OFAC requested public comments on the Regulations. No public
comments were received. However, based on its experience and that of
other agencies that also participate in the implementation and
administration of the Clean Diamond Trade Act and the KPCS, OFAC is
revising the Regulations in four respects: (1) To specify that the
ultimate consignee is responsible for retaining the original Kimberley
Process Certificate accompanying an importation into the United States;
(2) to require the ultimate consignee to report the receipt of a
shipment of rough diamonds to the relevant foreign exporting authority
within 15 calendar days of the date that the shipment arrived at a U.S.
port of entry; (3) to advise persons engaged in the diamond trade of a
pending requirement of U.S. Customs and Border Protection (Customs)
that customs brokers, importers, and filers making entry of a shipment
of rough diamonds either submit through Custom's Automated Broker
Interface (ABI) system the unique identifying number of the Kimberley
Process Certificate accompanying the shipment or, for non-ABI entries,
indicate the certificate number on the Customs Form 7501 Entry Summary
at each entry line; and (4) to clarify the country-of-origin reporting
requirements for shipments of
[[Page 56937]]
parcels of mixed origin rough diamonds. OFAC is now issuing the
Regulations as a final rule, incorporating these four revisions and the
others described below.
Section 592.301 of the Regulations defines the term Controlled
through the Kimberley Process Certification Scheme. OFAC is revising
two subsections of this definition and adding a note to the section.
First, Sec. 592.301(a)(1) requires, among other things, that a shipment
of rough diamonds imported into the United States be accompanied by a
Kimberley Process Certificate validated by the relevant exporting
authority. The certificate must be presented if demanded by Customs.
Also, Sec. 592.501 of the Regulations requires a United States person
importing rough diamonds into the United States to maintain full and
accurate records of the transaction for at least five years after the
date of the transaction. OFAC has been advised that persons engaged in
the diamond trade are uncertain which person should maintain possession
of the original Kimberley Process Certificate accompanying an
importation into the United States. To eliminate this uncertainty and
to facilitate OFAC's and Customs' enforcement efforts, OFAC is revising
Sec. 592.301(a)(1) to specify that the ultimate consignee reported on
the Customs Form 7501 Entry Summary or its electronic equivalent filed
with Customs is responsible for retaining that certificate for a period
of at least five years from the date of the importation.
Second, Sec. 592.301(a)(3) of the Regulations originally required
the importer of record in the United States to confirm receipt of a
shipment of rough diamonds to the relevant foreign exporting authority.
OFAC is revising this subsection to specify which person involved in an
importation is required now to report the receipt of a shipment in an
effective and timely manner. As revised, Sec. 592.301(a)(3) specifies
that the ultimate consignee reported on the Customs Form 7501 Entry
Summary or its electronic equivalent filed with Customs is the person
responsible for reporting receipt of the shipment to the foreign
exporting authority. Also, the revised Sec. 592.301(a)(3) now requires
that the ultimate consignee must report specified information about the
shipment to the foreign exporting authority within 15 calendar days of
the date that the shipment arrived at a U.S. port of entry.
OFAC also is adding a note to Sec. 592.301 to reflect a pending
Customs requirement that customs brokers, importers, and filers making
entry of a shipment of rough diamonds either submit through Customs'
Automated Broker Interface (ABI) system the unique identifying number
of the Kimberley Process Certificate accompanying the shipment or, for
non-ABI entries, indicate the certificate number on the Customs Form
7501 Entry Summary at each entry line. This requirement will take
effect on November 1, 2004. The submission of the Kimberley Process
Certificate number will facilitate the Census Bureau's compilation of
statistical data relating to the importation of rough diamonds.
Section 592.307 of the Regulations defines the term Kimberley
Process Certificate to include a requirement that the certificate
identify the country of origin for a shipment of one or more parcels of
rough diamonds of unmixed (i.e., from the same) origin. The
definition's silence with respect to the treatment of a shipment that
includes a parcel of mixed origin rough diamonds has prompted questions
from importers as to whether the certificate may be used and how it
should be completed, in such circumstances. A shipment including a
parcel of mixed-origin rough diamonds is to be entered into the United
States with the Kimberley Process Certificate validated by the relevant
exporting authority, and the certificate need not indicate the
countries of origin of the diamonds. With respect to such a shipment,
however, OFAC is adding a note to Sec. 592.307(b) to state that the
country-of-origin field must be filled in with asterisks. The note also
advises that the shipment still must comply with all other country-of-
origin reporting requirements imposed by law.
OFAC is also revising the definition of Effective date in
Sec. 592.302 of the Regulations in light of the new reporting
requirements imposed by Sec. 592.301(a)(3), as well as revising
Sec. 592.801 to reflect the Office of Management and Budget's (OMB)
issuance of three control numbers authorizing the collections of
information in the Regulations. Finally, OFAC is revising Sec. 592.602
to reflect properly the basis upon which the Director of OFAC may
decide to issue a prepenalty notice and to make other minor
corrections.
Electronic and Facsimile Availability
This file is available for download without charge in ASCII and
Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access
supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be
accessed by modem dialup at (202) 512-1387 followed by typing ``/GO/
FAC.'' Paper copies of this document can be obtained by calling the
Government Printing Office at (202) 512-1530. Additional information
concerning the programs administered by OFAC 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.
Executive Order 12866, Administrative Procedure Act, Regulatory
Flexibility Act, and Paperwork Reduction Act
Because the regulations 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.
With respect to section 3507 of the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the collections of information in
Secs. 592.301(a)(1), 592.501, and 592.603 of the Regulations are made
pursuant to OFAC's Reporting, Procedures and Penalties Regulations (31
CFR part 501) and have been approved by OMB under control number 1505-
0164. See 31 CFR 501.901. The collection of information in
Sec. 592.301(a)(4) relating to the Census Bureau's Foreign Trade
Statistics Regulations (15 CFR part 30) has been approved by OMB under
control number 0607-0152. See Automated Export System Mandatory Filing
for Exports (Reexports) of Rough Diamonds, 68 FR 59877 (Oct. 20, 2003).
The collection of information in Sec. 592.301(a)(3) of the
Regulations has been submitted to and approved by OMB pending public
comment and has been assigned OMB control number 1505-0198. Section
592.301(a)(3) specifies that the ultimate consignee identified on the
Customs Form 7501 Entry Summary filed with Customs is required to
report specified information about the shipment of rough diamonds
imported into the United States to the foreign exporting authority
within 15 calendar days of the date that the shipment arrived at a U.S.
port of entry. This collection of information is needed to monitor the
integrity of international rough diamond shipments, and the information
collected will be used to further the compliance, enforcement, and
civil penalty programs of OFAC,
[[Page 56938]]
U.S. Customs and Border Protection, and the Bureau of Immigration and
Customs Enforcement. See sections 5(a) and 8 of the Clean Diamond Trade
Act.
With respect to all of the foregoing collections of information, 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.
The likely respondents and recordkeepers affected by the new
collection of information in Sec. 592.301(a)(3) are business
organizations and individuals engaged in the international diamond
trade. The estimated annual number of respondents and recordkeepers is
250, and the estimated total annual number of responses is 3,000.
The estimated total annual reporting and/or recordkeeping burden is
estimated to be 500 hours. The estimated average annual burden per
respondent/recordkeeper is 2 hours, based on an estimated annual
frequency of 10 to 15 responses and an estimated time per response of
10 minutes.
Comments are invited on: (a) Whether this collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information has practical utility; (b) the
accuracy of the agency's estimate of the burden of the collection of
information; (c) ways to enhance the quality, utility, and clarity of
the information to be collected; (d) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques and other forms of information
technology; and (e) estimated capital or start-up costs of operation,
maintenance, and purchase of services to provide information.
Comments concerning the above information, the accuracy of these
burden estimates, and suggestions for reducing this burden should be
directed to OMB, Attention: Desk Officer for the Department of the
Treasury, Office of Information and Regulatory Affairs, Washington, DC
20503, with a copy to Chief of Records, Attention: Request for
Comments, Office of Foreign Assets Control, Department of the Treasury,
1500 Pennsylvania Avenue, NW., Washington, DC 20220. Any such comments
should be submitted not later than November 22, 2004. All comments on
the collection of information in Sec. 592.301(a)(3) will be a matter of
public record.
List of Subjects in 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 592
is revised 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); Pub. L. 108-19, 117
Stat. 631 (19 U.S.C. 3901-3913); E.O. 13312, 68 FR 45151 3 CFR, 2003
Comp., p. 246. [FEDREG][VOL]*[/VOL][NO]*[/NO][DATE]*[/
DATE][RULES][RULE][PREAMB][AGENCY]*[/AGENCY][SUBJECT]*[/SUBJECT][/
PREAMB][SUPLINF][HED]*[/HED][REGTEXT][P]*[/P]
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 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)(i) 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
[[Page 56939]]
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 to 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 an original Kimberley Process Certificate. The certificate must be
presented in connection with an importation or exportation of rough
diamonds if demanded by United States customs officials. Pursuant to 31
CFR Secs. 501.601 and 501.602, the person identified as the ultimate
consignee (see Customs Directive 3550-079A) on the Customs Form 7501
Entry Summary or its electronic equivalent filed with U.S. Customs and
Border Protection in connection with an importation of rough diamonds
must retain the original Kimberley Process Certificate for a period of
at least five years from the date of importation and must make such
certificate available for examination upon demand.
(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 person identified as the ultimate consignee (see Customs
Directive 3550-079A) on the Customs Form 7501 Entry Summary or its
electronic equivalent filed with U.S. Customs and Border Protection in
connection with an importation of rough diamonds must report that
person's receipt of a shipment of rough diamonds to the relevant
foreign exporting authority within 15 calendar days of the date that
the shipment arrived at the U.S. port of entry. The report must refer
to the relevant Kimberley Process Certificate by its unique identifying
number; specify the number of parcels in the shipment; specify the
total carat weight of the shipment; and identify the importer and
exporter of the shipment. The report need not be in any particular form
and may be submitted electronically or by mail or courier; 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
U.S. 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 and their importing and exporting authorities. 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. Pursuant to 31 CFR Secs. 501.601 and
501.602, 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.
Note 3 to Sec. 592.301. Effective November 1, 2004, customs
brokers, importers, and filers making entry of a shipment of rough
diamonds must either submit through U.S. Customs' Automated Broker
Interface (ABI) system the unique identifying number of the
Kimberley Process Certificate accompanying the shipment or, for non-
ABI entries, indicate the certificate number on the Customs Form
7501 Entry Summary at each entry line.
Sec. 592.302 Effective date.
The term effective date refers to the effective date of the
applicable prohibitions and directives contained in this part as
follows:
(a) With respect to all provisions of this part except for
Sec. 592.301(a)(3), 12:01 a.m., eastern daylight time, July 30, 2003;
and
(b) With respect to Sec. 592.301(a)(3), September 23, 2004.
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.
(b) The exporting authority for the United States is the U.S.
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
[[Page 56940]]
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 U.S.
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;
Note to paragraph (b). A shipment including a parcel of mixed-
origin rough diamonds is to be entered into the United States with
the Kimberley Process Certificate accompanying the shipment, and the
certificate need not indicate the countries of origin of the
diamonds. With respect to such a shipment, the country-of-origin
field on the certificate must be filled in with asterisks. The
shipment must, however, still comply with all other country-of-
origin reporting requirements imposed by statute or regulation.
(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 paragraph (l). 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 the identical state in which it entered. The
validation, recordkeeping, and reporting 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.
For provisions relating to required records and reports, see part
501, subpart C, of this chapter. Recordkeeping and reporting
requirements imposed by part 501 of this chapter with respect to the
prohibitions contained in this part are considered requirements arising
pursuant to this part.
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
[[Page 56941]]
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)
of this section, 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 Secs. 592.602 through 592.605. Section 8(c) of
the Act also authorizes the U.S. Bureau of Customs and Border
Protection and the U.S. Bureau of Immigration and Customs
Enforcement, as appropriate, to enforce the penalty provisions set
forth in paragraph (a) of this section 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 U.S. Bureau of the Census. The Office of Foreign Assets Control
civil penalty procedures set forth below are separate from, and
independent of, any penalty procedures that may be followed by the
U.S. Bureau of Customs and Border Protection and the U.S. 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 reason 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 civil 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. 592.603 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 of the Office of Foreign Assets Control
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 the Office of Foreign Assets Control 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
writing and may be handwritten or typed. The response need not be in
any particular form. A copy of the written 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 include 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 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.
[[Page 56942]]
(d) Failure to respond. Where the Office of Foreign Assets Control
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 the information
collections relating to the recordkeeping and reporting requirements of
Secs. 592.301(a)(1), subpart C, Sec. 592.501, subpart E, and 592.603,
subpart F, see Sec. 501.901 of this chapter. The information collection
requirements in Secs. 592.301(a)(3) and (a)(4), subpart C, have been
approved by the OMB and assigned control numbers 1505-0198 and 0607-
0152, respectively. 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: August 20, 2004.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: September 2, 2004.
Juan Zarate,
Assistant Secretary (Terrorist Financing), Department of the Treasury.
[FR Doc. 04-21329 Filed 9-20-04; 10:11 am]
BILLING CODE 4810-25-P