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F

ederal

Reserve Bank

OF DALLAS
ROBERT

D. M c T E E R , J R .

P R E S ID E N T
AND

C H IE F E X E C U T IV E O F F IC E R

August 17, 1995

DALLAS, TEXAS
75265-5 9 0 6

Notice 95-78

TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Policy Statement from
the Office of Foreign Assets Control
DETAILS

The Office of Foreign Assets Control (OFAC) will no longer treat fullyautomated transactions differently from manually-processed transactions for civil penalty
purposes. The policy, which is effective September 1, 1995, has been instituted due to
the wide availability and use by financial institutions of name-recognition software to
screen fully-automated financial transactions for potential violations of economic
sanctions programs.
ATTACHMENT

A copy of the OFAC policy statement as it appears on pages 34142-43, Vol.
60, No. 126, of the Federal Register dated June 30, 1995, is attached.
MORE INFORMATION

For more information, please contact Dennis Wood, Chief, Compliance
Programs Division, (202) 622-2490, at the OFAC, or Mrs. B. S. Scott, Chief, Civil Penal­
ties Program, (202) 622-6140, at the OFAC. For additional copies of this Bank’s notice,
please contact the Public Affairs Department at (214) 922-5254.
Sincerely yours,

F o r additional copies, bankers and others are encouraged to use one o f the following toll-free numbers in contacting the Federal
Reserve Bank o f Dallas: Dallas Office (800) 333 -4460; E l Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

34142

Federal Register / Vol. 60, No. 126 / Friday, June 30, 1995 / Rules and Regulations
Foreign Assets Control (“FAC”) will no
longer treat fully-automated
transactions differently from manuallyprocessed transactions for civil penalty
purposes.
EFFECTIVE DATE: September 1,1995.
FOR FURTHER INFORMATION CONTACT:

Dennis P. Wood, Chief, Compliance
Programs Division, tel.: 202/622-2490,
or Mrs. B.S. Scott, Chief, Civil Penalties
Program, tel.: 202/622-6140, Office of
Foreign Assets Control, Department of
the Treasury, Washington, D.C. 20220.
SUPPLEMENTARY INFORMATION:

Electronic Availability
This document is available as an
electronic file on The Federal Bulletin
Board the day of publication in the
Federal Register. By modem dial 202/
512-1387 and type “/GO/FAC” or call
202/512-1530 for disks or paper copies.
This file is available for downloading in
WordPerfect 5.1, ASCII, and Postscript
formats. The document is also
accessible for downloading in ASCII
format without charge from Treasury’s
Electronic Library (“TEL”) in the
“Business, Trade and Labor Mall” of the
FedWorld bulletin board. By modem
dial 703/321-3339, and select self­
expanding file “T11FR00.EXE” in TEL.
For Internet access, use one of the
follo\ving protocols: Telnet =
f6dworld.gov (192.239.93.3); World
Wide Web (Home Page) = http://
www.fedworld.gov; F IT ftp.fedworld.gov (192.239.92.205).

DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control

31 CFR Chapter V
Compliance with 31 CFR Chapter V
with Respect to Fully-Automated
Financial Transactions
AQENCY: Office of Foreign Assets

Control, Treasury.
ACTION: Policy Statement.
SUMMARY: Due to the wide availability

and use by financial institutions of
name-recognitiou software to screen
fully-automated financial transactions
for potential violations of economic
sanctions programs, the Office of

Background
Essential elements of economic
sanctions programs administered by
FAC include prohibitions on transfers of
property to or for the benefit of targeted
governments, entities, and individuals,
including the blocking of targeted
persons’ property, when it comes withinthe jurisdiction of the United States.
Civil monetary penalties may be
imposed administratively by FAC for
violations of these transfer prohibitions
and blocking requirements pursuant to
the statutes authorizing most FAC
sanctions programs. See, e.g., 22 U.S.C.
5113(b) (repealed June 8,1994, see Pub.
L. 103-149, section 4(a), 107 Stat. 1504
(1993)); Pub. L. 101-513, section 586E,
104 Stat. 2047 (1990); 50 U.S.C. 1705; 50
U.S.C. App. 16.
A large proportion of financial
transactions are now handled by
computer, without intervention by bank
or other financial institution personnel.
In the past, FAC treated such fullyautomated or “straight through”
transactions as being beyond the
knowledge of financial institutions.
Thus, for purposes of administering its

Federal Register / Vol. 60, No. 126 / Friday, June 30, 1995 / Rules and Regulations
cavil monetary penalty authority under
sanctions programs contained in 31 CFR
chapter V, FAC considered the fact that
a transfer violation arose in a fullyautomated transaction as a strongly
mitigating circumstance in determining
liability.
In the past few years, financial
institutions that handle significant
volumes of international transfers have
developed and put into use
“interdiction software” that scans
incoming automated transfer
instructions for words (names of banks
and transaction parties, geographical
locations, and transaction descriptions)
likely to indicate that a transaction is
subject to the prohibitions in 31 CFR
chapter V. Commercial interdiction
software is now widely available and in
use, and information needed to update
the database Used in screening
transactions as FAC amends its lists of
blocked persons and specially
designated nationals is immediately
available for computer downloading
from numerous governmental and
private sources. The use of such
software by financial institutions has
substantially enhanced the effectiveness
of FAC sanctions programs.
It has been determined that it is no
longer appropriate to treat fullyautomated financial transactions that
violate economic sanctions prohibitions
as being beyond a financial institution’s
knowledge or intent. Beginning on
September 1,1995, FAC will no longer
treat the fully-automated processing of
violative transactions as a full defense
in civil penalty proceedings.
Dated: May 31,1995.
R. Richard Newcomb,

Director, Office of Foreign Assets Control.
Approved: ]une 5,1995.
John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff
& Trade Enforcement).
[FR Doc. 95-16121 Filed 6-27-95; 4:26 pml
BILUNG CODE 4810-2S-F

34143


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102