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31 CFR § 597.201 - Prohibited transactions involving blocked assets or funds of foreign terrorist organizations or their agents.

Date issued: Oct. 08 1997

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§597.201 Prohibited transactions involving blocked assets or funds of foreign terrorist organizations or their agents.
(a) Upon notification to Congress of the Secretary of State's intent to designate an organization as a foreign terrorist organization pursuant to 8 U.S.C. 1189(a), until the publication in the Federal Register as described in paragraph (c) of this section, any U.S. financial institution receiving notice from the Secretary of the Treasury by means of order, directive, instruction, regulation, ruling, license, or otherwise shall, except as otherwise provided in such notice, block all financial transactions involving any assets of such organization within the possession or control of such U.S. financial institution until further directive from the Secretary of the Treasury, Act of Congress, or order of court.
(b) Except as otherwise authorized by order, directive, instruction, regulation, ruling, license, or otherwise, from and after the designation of an organization as a foreign terrorist...

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TURBOFAC Commentary (366 words)

Notes:

This provision, and FTOSR in general, are highly irregular relative to the typical blocking regulation and the ordinary 5XX.201 provision. This is owed to the fact that the regulations are a direct product of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), 18 U.S.C. § 2332d (see comments thereto).

In addition to the fact that these regulations only apply to financial institutions, there is the scope of the prohibitions, which technically extend to "agents" of FTOs by operation of law, i.e. without the typical affirmative determination by OFAC as it relates to the designation of persons associated with or acting on behalf of other designated persons. For more on this issue, see General Note on the Notion of Being an "Agent" of an FTO for the...