§ 536.509 Certain transactions for maintenance, employment, and related banking services for blocked individuals physically located in the United States.
(a) Individuals who are specially designated narcotics traffickers who are in U.S. custody or incarcerated in jails, prisons, or similar facilities in the United States (“covered individuals”), are authorized to engage in the following transactions within the United States:
(1) Purchasing, making payment for, and receiving goods and services for their maintenance and the maintenance of their spouse or persons who would ordinarily share a common dwelling as a family with them, located in the United States, including food, clothing, housing, medical care, education, transportation, insurance, and utilities;
(2) Obtaining or continuing employment and engaging in all transactions ordinarily incident to such employment, including receipt of salary and benefits;
(3) Establishing accounts with a U.S. financial institution, or a commissary-type account with a prison, jail, or other similar facility, located in the United States, for use in connection with the transactions authorized in paragraph (a)(1) and (a)(2) of this section; and
(4) Receiving and making funds transfers in furtherance of the authorized transactions set forth in paragraphs (a)(1) through (3) of this section from unblocked funds originating within or outside the United States, provided that any funds received may not originate from any individual or entity whose property or interests in property are blocked pursuant to any part of this chapter or any Executive order or statute, other than the covered individual or his or her spouse or persons who would ordinarily share a common dwelling as a family with the covered individual.
(b) Any financial institution that has established any account pursuant to paragraph (a)(3) of this section, excluding commissary-type accounts with prisons, jails, or other similar facilities, must provide the name and address of the financial institution, the name of the account holder, and the account number to OFAC within 10 business days of the establishment of the account.
(c) This general license does not authorize any funds transfers to any location outside the United States.
Note 1 to paragraph (c): A covered individual has an interest in any funds remaining in a commissary-type account with a prison, jail, or other similar facility established pursuant to paragraph (a)(3) of this section after the covered individual is released from custody or incarceration.
Note 2 to paragraph (c): In the case of individuals who are in custody or incarcerated, funds transfers must be authorized by and consistent with the conditions, protocols, and other requirements established by the jail, prison, or other facility.
Note 3 to § 536.509: The authorization in this section only applies to laws and regulations administered by OFAC and should not be interpreted to excuse compliance with other applicable laws or regulations, including the immigration laws of the United States.
[12-20-22 update - similar provision added at 599.511]
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1) This provision—added to the NTSR on 5-17-2021 in connection with a broader modernization of the regulations—is unique to the FNKSR and NTSR.
The FNKSR, perhaps along with the GTSR, is one of the sanctions programs that frequently apply to foreign nationals that are prisoners in the U.S. (and are therefore “U.S. persons” while they are awaiting trial or imprisoned in the U.S.) Compare Case No. FNK-2016-327937-1.
Up through the addition of this GL, OFAC had typically issued "maintenance" specific licenses for the situations at issue here. See e.g., LICENSE No. FNK-2015-323572-1.
2) Crucially, this GL is a "fresh funds" GL only. In cases where SDNT prisoner has funds located only in the U.S., past practice suggests that OFAC may license limited unblocking for maintenance purposes.
3) A prisoner in the U.S. is a U.S. person (hence the need for the GL), and all funds within the “possession or control” of a U.S. person are blocked. Does that mean that all funds over which the prisoner has “control” (effective or constructive) are outside the scope of the GL because they are blocked? It seems not; see again LICENSE No. FNK-2015-323572-1 (and comments thereto). In this regard, it is notable that OFAC explicitly contemplates that non-blocked funds qualifying for the GL may come from the blocked spouse of a blocked person located in the U.S. The implication here is that funds coming from a spouse of a blocked person are not necessarily within the “control” of the blocked person for purposes of the blocking prohibition; otherwise they would technically be blocked funds because they would be within the “possession or control” of a blocked person.
4) Civil Enforcement Information - MoneyGram Payment Systems, Inc. predates this GL by less than a month, and may have been the impetus for the addition implementation of the GL.
5) "[P]ersons who are sharing or who would ordinarily share a common dwelling as a family" is a construction that is unique to this GL. It seems aimed at including same sex partners, but the applicability to adult children and extended family members is unclear. "[O]rdinarily share a common dwelling as a family" is largely a cultural/generational question. One would imagine that the cutoff is not at 18-year-olds, but beyond that it is not clear.
6) See notable guidance letter at Case No. ILLICIT-DRUGS-EO14059-2024-1218345-1.
7) Note the reporting requirement at paragraph (b) (“[a]ny financial institution that has established any account pursuant to paragraph (a)(3)…excluding commissary-type accounts with prisons, jails, or other similar facilities, must provide the name and address of the financial institution, the name of the account holder, and the account number to OFAC within 10 business days of the establishment of the account.”). This appears to have been included as a separate requirement, as opposed to a note referencing the RPPR, because such accounts, when established pursuant to a general license and where debits are generally licensed as well, are not “blocked accounts” for purposes of the RPPR and the standard definition of “blocked account”. See comments to 501.603 and comment 4 to General Note on the 300-level definition of ‘Blocked account; blocked property’.