New Treasury Regulations Use Expanded Definition of Prohibited Charitable Contributions

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Date: 
July 8, 2013

On July 5, 2013 the Department of Treasury published “Technical Amendments to Counter-Terrorism Sanctions Regulations” that include changes to definitions of prohibited transactions and charitable contributions under terrorism sanctions programs to make them consistent with Executive Order 13372 of February 2005.  That order expanded the prohibition of charitable donations to or for the benefit of listed terrorists to include donations “by” or “received from” them as well.  No change is made to the unequal treatment afforded organizations who may make a contribution unknowingly, which are protected under general sanctions but not under sanctions applying to groups listed as threatening the Middle East peace process. The new regulations also have “new interpretive sections” on blocked property to say property is considered “owned” by a listed terrorist if the person or entity owns a fifty percent or greater interest in it.  In such cases, the property can be blocked (frozen) under Treasury regulations.

The new regulations on charitable contributions are essentially the same, but are contained in two different sections:

Executive Order 13224

(Sept. 23, 2001)

Executive Order 12947

(Jan.  23, 1995)

31 CFR 594

31 CFR 595

Global Terrorism Sanctions Regulations (GTSR)

Terrorism Sanctions Regulations (TSR)

General national emergency re “grave acts of terrorism…”

“Grave acts of violence committed by foreign terrorists that disrupt the Middle East peace process.”

 

The new 31 CRF 594.409 states:

§ 594.409 Charitable contributions.

Unless specifically authorized by the Office of Foreign Assets Control pursuant to this part, no charitable contribution or donation of funds, goods, services, or technology, including contributions or donations to relieve human suffering, such as food, clothing, or medicine, may be made by, to, or for the benefit of, or received from, any person whose property and interests in property are blocked pursuant to §594.201(a).

For the purposes of this part, a contribution or donation is made by, to, or for the benefit of, or received from, any person whose property and interests in property are blocked pursuant to § 594.201(a) if made by, to, or in the name of, or received from or in the name of, such a person;

if made by, to, or in the name of, or received from or in the name of, an entity or individual acting for or on behalf of, or owned or controlled by, such a person;

or if made in an attempt to violate, to evade, or to avoid the bar on the provision of contributions or donations by, to, or for the benefit of such a person, or the receipt of contributions or donations from any such person.

The new 31 CFR 595.408 states:

§ 595.408 Charitable contributions.

(a) Unless specifically authorized by the Office of Foreign Assets Control pursuant to this part, no charitable contribution or donation of funds, goods, services, or technology, including contributions or donations to relieve human suffering, such as food, clothing, or medicine, may be made by, to, or for the benefit of, or received from, any specially designated terrorist. For the purposes of this part, a contribution or donation is made by, to, or for the benefit of, or received from, a specially designated terrorist if made by, to, or in the name of, or received from or in the name of, a specially designated terrorist; if made by, to, or in the name of, or received from or in the name of, an entity or individual acting for or on behalf of, or owned or controlled by, a specially designated terrorist; or if made in an attempt to violate, to evade, or to avoid the bar on the provision of contributions or donations by, to, or for the benefit of a specially designated terrorist, or the receipt of contributions or donations from a specially designated terrorist.

(b) Individuals and organizations who donate or contribute funds, goods, services, or technology without knowledge or reason to know that the donation or contribution is destined to or for the benefit of a specially designated terrorist shall not be subject to penalties for such donation or contribution.

Note that section (b) in 595.408 is not included in 594.409, leaving organizations which may inadvertently and unknowing provide goods or funds under different sanctions programs subject to very different legal consequences.  No explanation is offered for this disparate treatment.   

Part 594.317 also includes a new definition of “technologies” in the prohibition on providing material support to a listed person or entity:

‘‘Technologies’’ as used in this definition means specific information necessary for the development, production, or use of a product, including related technical data such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, or other recorded instructions.

More broadly, both sets of regulations add the prohibition on receiving funds, goods, etc. to the list of prohibited transactions under the regulations generally. 

The new regulations did not go through the normal public notice and comment process, because they are exempt due to involving a foreign affairs function.