2 June 1997
Text as Prepared for Delivery
May 15, 1997
TREASURY OFFICE OF FOREIGN ASSETS CONTROL,
DIRECTOR R. RICHARD NEWCOMB,
SENATE FOREIGN RELATIONS SUBCOMMITTEE ON AFRICAN AFFAIRS
The Office of Foreign Assets Control (OFAC) administers economic sanctions and embargo programs against specific foreign countries or groups to further U.S. foreign policy and national security objectives. In administering these programs, OFAC generally relies upon Presidential authority contained in the Trading With the Enemy Act (TWEA) or the International Emergency Economic Powers Act (IEEPA), or upon specific legislation, to prohibit or regulate commercial or financial transactions with specific foreign countries or groups.
Examples of current TWEA programs include comprehensive asset freezes and trade embargoes against North Korea and Cuba. Examples of current IEEPA programs include similarly broad sanctions against Libya, Iraq, the Cali Cartel, and certain terrorist groups, as well as comprehensive trade sanctions against Iran.
Alternatively, sanctions may be imposed by Congress directly through legislation. Administration of sanctions within the Executive branch in these cases is usually delegated to the relevant enforcement agency, depending on the nature of the restrictions. Between 1986 and 1991, for example, OFAC administered the trade and investment prohibitions against South Africa mandated by the Comprehensive Anti-Apartheid Act. Similarly, OFAC has been delegated administration of Section 321 of the Antiterrorism and Effective Death Penalty Act of 1996 (the Act), which was signed into law by the President on April 24, 1996.
Section 321 of the Act prohibits all financial transactions by United States persons with the governments of terrorism-supporting nations designated under section 6(j) of the Export Administration Act. Effective August 22, 1996, except as provided in regulations issued by the Secretary of Treasury, in consultation with the Secretary of State, the Act prohibited all financial transactions by U.S. persons with: North Korea, Cuba, Iran, Libya, Iraq, Syria, and Sudan.
All but Syria and Sudan were the subject of existing comprehensive financial and trade embargoes at the time of enactment. In accordance with foreign policy guidance provided to Treasury by State, existing sanctions programs against North Korea, Cuba, Iran, Libya, and Iraq were continued without change. This permitted the specific policies developed over time with respect to each of these countries to remain in effect, including the exceptions to each embargo dictated by unique humanitarian, diplomatic, news gathering, intellectual property, and other concerns.
New regulations, known as the Terrorism List Governments Sanctions Regulations, were issued to impose the prohibitions on financial transactions with respect to Syria and Sudan. The new regulations, also drafted in accordance with foreign policy guidance provided by State, authorize financial transactions with the Governments of Syria and Sudan except for (1) transfers from those governments in the form of donations and (2) transfers with respect to which the U.S. person knows or has reasonable cause to believe that the financial transaction poses a risk of furthering terrorist acts in the United States. The regulations are consistent with the legislative history of Section 321 of the Act.
From a sanctions enforcement perspective, we believe the Act and implementing regulations are important because they provide OFAC with comprehensive jurisdiction over all financial transactions between U.S. persons and the Governments of Syria and Sudan. We now have authority for the first time to act to stop or impede any particular suspicious transfer to or from these governments by informing U.S. persons handling the transfer that a reasonable cause exists to believe that the transaction may pose a risk of furthering terrorist activity in the United States, or any other questionable activity inconsistent with the Act's antiterrorist purposes. We believe the Act's authority provides a significant new tool in the war against terrorist funding.
Thank you. I would be pleased to take any questions.
See related Treasury and State Department counterterrorism regulations: