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The Office of Foreign Assets Control (OFAC) administers economic sanctions andembargo programs against specific foreign countries or groups tofurther U.S. foreign policy and national security objectives. Inadministering these programs, OFAC generally relies uponPresidential authority contained in the Trading With the EnemyAct (TWEA) or the International Emergency Economic Powers Act(IEEPA), or upon specific legislation, to prohibit or regulatecommercial or financial transactions with specific foreigncountries or groups.
Examples of currentTWEA programs include comprehensive asset freezes and tradeembargoes against North Korea and Cuba. Examples of current IEEPAprograms include similarly broad sanctions against Libya, Iraq,the Cali Cartel, and certain foreign terrorist groups, as well ascomprehensive trade sanctions against Iran.
From time to time,sanctions have been imposed by Congress directly throughlegislation. Between 1986 and 1991, for example, OFACadministered the trade and investment prohibitions against SouthAfrica mandated by the Comprehensive Anti-Apartheid Act.Similarly, OFAC has been delegated administration of Section 321of the Antiterrorism and Effective Death Penalty Act of 1996 (theAct), which was signed into law by the President on April 24,1996.
SECTION 321
Section 321 of theAct prohibits all financial transactions by United States personswith the governments of terrorism-supporting nations designatedunder section 6(j) of the Export Administration Act, except asprovided in regulations issued by the Secretary of Treasury, in
consultation withthe Secretary of State. The Act prohibited all financialtransactions by U.S. persons with: North Korea, Cuba, Iran,Libya, Iraq, Syria, and Sudan.
All but Syria andSudan were the subject of existing comprehensive financial andtrade embargoes at the time of enactment. In accordance withforeign policy guidance provided to Treasury by State, existingsanctions programs against North Korea, Cuba, Iran, Libya, andIraq were continued without change. This permitted the specificpolicies developed over time with respect to each of thesecountries to remain in effect, including the exceptions to eachembargo dictated by unique humanitarian, diplomatic, newsgathering, intellectual property, and other concerns.
New regulations,known as the Terrorism List Governments Sanctions Regulations,were issued August 23, 1996 to impose the prohibitions onfinancial transactions with respect to Syria and Sudan. Whilemost transactions are currently authorized, the new regulations,drafted in consultation with the Department of State, do prohibitfinancial transactions which involve transfers from thosegovernments in the form of donations and transfers with respectto which U.S. persons know or have reasonable cause to believethat there is a risk of furthering terrorist acts in the UnitedStates.
From a sanctionsenforcement perspective, we believe the Act and implementingregulations are important because they provide OFAC withcomprehensive jurisdiction over all financial transactionsbetween U.S. persons and the Governments of Syria and Sudan. Wenow have authority to act to stop or impede any particularsuspicious transfer to or from these governments by informingU.S. persons handling the transfer that a reasonable cause existsto believe that the transaction may pose a risk of furtheringterrorist activity in the United States. We believe the Act'sauthority provides a significant new tool to prevent funding ofterrorist activities in the U.S.
H.R. 748
H.R. 748 would amendthe current law, section 321 of the Antiterrorism Act, to repealall Executive flexibility in administering the prohibition onfinancial transactions against terrorism supporting governments,permitting only transactions incident to routine diplomaticrelations among countries.
This codificationwould drastically alter pre-existing sanctions programs againstfive of the seven terrorism-supporting governments, and seriouslyinfringe the President’s ability to conduct foreign policyand use sanctions to respond quickly and flexibly to changingsituations in embargoed countries.
OFAC's function isto implement and enforce sanctions programs. For that reason, mycomments are addressed to sanctions administration, and the vitalrole that licensing plays in the successful implementation of ourprograms. Our sanctions programs on the seven countriesdesignated by the State Department as supporting internationalterrorism are quite diverse, and carry different foreign policyguidance. Without the ability -- through general and specificlicenses -- to tailor sanctions programs to the real world and towholly unforeseeable situations that arise daily, sanctions'usefulness would be lost as an instrument for the defense of U.S.foreign policy, national security, and economic interests.
In each of oureconomic sanctions programs on terrorist countries, the scope ofthe prohibitions and of OFAC licensing policy and practiceresponds to specific national security, foreign policy oreconomic conditions. In the case of Iran, we have administered afull blocking of government assets with comprehensive tradesanctions (1979-81), import prohibitions (1987-95), andcomprehensive sanctions on trade in goods and services withoutthe blocking of assets (May 1995-date). In sanctions on Cuba(1963-date) and North Korea (1950-date), we have administeredcomprehensive blocking and trade sanctions applicable both to thegovernments and all nationals of these countries. With respect toLibya (1986-date) and Iraq (1990-date), comprehensive blocking ofgovernment assets and trade sanctions are in place. However,unlike Cuban and North Korean nationals, Libyan and Iraqinationals' assets are not blocked. Pursuant to United Nationssanctions, transfers to persons in Iraq are prohibited. There areprohibitions against travel transactions to Libya, Iraq, andCuba, but travel transactions are permitted by general licenseunder the North Korean sanctions, and are exempt by statute forIran. These variations are not haphazard, but reflect thespecific policy contexts in which each program has developed.
In each of theseprograms, general and specific licensing policies have beenadopted to minimize unintended human suffering whileaccomplishing program goals and to reflect general interests ofthe United States.
Examples of theformer include licenses permitting expenditures related to travelto visit sick and dying relatives in Cuba; permittingparticipation in amateur and nonpolitical international athleticcompetitions and people to people exchanges; allowing limitedfunds to be transferred to close relatives so that they canemigrate from Cuba; authorizing humanitarian relief for thepeople of North Korea and Iran suffering from natural disasters;permitting husbands, wives, sons and daughters to stay with theirimmediate families in Tripoli; dispensing U.S. vaccines to combatthe outbreak of epidemics; bringing home the remains of Americanswho have died overseas and administering decedents estates intarget countries; allowing payments for boat repairs when a U.S.vessel has been blown into target country waters during a storm.The list goes on and on.
Among theauthorizations serving U.S. interests are licenses permittingtravel payments related to journalism; the compensation ofsuccessful U.S. claimants in the Iran-U.S. Claims Tribunal in TheHague from Iranian Government funds; reciprocal U.S. and targetcountry intellectual property protection; payments when it isnecessary to overfly target country airspace or for emergencylandings; the acquisition and sale of publications, informationand information materials; and a wide range of humanitariandonations, remittances, family payments, and travel-relatedtransactions.
In removinglicensing authority over financial transactions by U.S. personswith the governments of Cuba, Iran, Iraq, Libya, North Korea,Sudan and Syria, HR 748 would not only adversely affect thePresident in his Constitutional responsibility to conduct theforeign affairs of the United States, it would also eliminateOFAC's ability to make rational decisions about very human andoften unforeseen events and cause great suffering for unintendedand untargetted third parties.
Thank you.