OFAC Rewrites Cyber Sanctions Rule

OFAC Rewrites Cyber Sanctions Rule


Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cyber-Related Sanctions Regulations, reissuing them in their entirety.  This final rule replaces the regulations that were published in abbreviated form on December 31, 2015, and includes additional interpretive guidance and definitions, general licenses, and other regulatory provisions. 


Originally issued April 1, 2015 under E.O. 13694, Treasury has authority to block property of any person determined be responsible for or complicit in, or to have engaged in, directly or indirectly, cyber-enabled activities originating from, or directed by persons located outside the United States that are likely to result in, or have contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States, and that have the purpose or effect of: 


(A) harming, or otherwise significantly compromising the provision of services by, a computer or network of computers that support one or more entities in a critical infrastructure sector; 


(B) significantly compromising the provision of services by one or more entities in a critical infrastructure sector; 


(C) causing a significant disruption to the availability of a computer or network of computers; 


(D) causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain; or 


(E) tampering with, altering, or causing a misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.

Other actions include:

(A) to be responsible for or complicit in theft of trade secrets through cyber-enabled means, likely to result in a significant threat to the national security, foreign policy, or economy of the United States; and

(B) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity described in subsections (1)(a)(ii) or (iii)(A) of amended E.O. 13694, or any person whose property and interests in property are blocked pursuant to amended E.O. 13694; 

(C) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to amended E.O. 13694; or 

(D) to have attempted to engage in any of the activities described in subsections (1)(a)(ii) and (iii)(A)–(C) of amended E.O. 13694. 


Cyber-Related CAATSA Provisions 

Countering America's Adversaries Through Sanctions Act-Related Sanctions (CAATSA), established new sanctions authorities and exceptions, in addition to amending, modifying, or otherwise affecting certain Ukraine-related executive actions.


Title II of CAATSA required the imposition of sanctions with respect to, among others, activities of the Russian Federation that undermine cybersecurity and persons who knowingly provide financial services in support of activities that undermine cybersecurity.

OFAC is incorporating the prohibitions in section 224(a)(1) of CAATSA, as well as the exceptions listed in section 236 of CAATSA, into the Regulations. OFAC has already implemented section 10 of SSIDES, as amended by section 228 of CAATSA, in 31 CFR part 589. 

OFAC anticipates incorporating the menu-based provisions of section 224(a)(2) of CAATSA into 31 CFR chapter V at a later date. 

Subpart B detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds in interest-bearing blocked accounts.

Section 578.204 of subpart B provides that all expenses incident to the maintenance of blocked tangible property shall be the responsibility of the owners and operators of such property, and that such expenses shall not be met from blocked funds, unless otherwise authorized. 

The section further provides that blocked property may be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property. 

In subpart C of the Regulations, new definitions are being added to other key terms used throughout the Regulations.


New § 578.405 explains that the prohibition on transactions with blocked persons in § 578.201 applies to services performed by U.S. persons on behalf of a person whose property and interests in property are blocked, as well as to services received by U.S. persons where the service is performed by, or at the direction of, a person whose property and interests in property are blocked.

Transactions otherwise prohibited by the Regulations but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E of the Regulations or by a specific license issued pursuant to the procedures described in subpart E of 31 CFR part 501. 

OFAC is redesignating the authorization for payments for legal services from funds originating outside the United States, and redesignating the authorization for emergency medical services. 

OFAC is adding three new general licenses to the Regulations: a general license authorizing the investment and reinvestment of certain, a general license authorizing the official business of the U.S. government, and a general license authorizing certain official business of international entities and organizations. 

General licenses and statements of licensing policy relating to this part also may be available through the Sanctions Related to Significant Malicious Cyber-Enabled Activities page on OFAC’s websitewww.treas.gov/ofac

Because the Regulations involve a foreign affairs function, the provisions of E.O. 12866 of September 30, 1993, “Regulatory Planning and Review”, 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


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