§541.508 Payments for legal services from funds outside the United States authorized.
Receipts of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to §541.507(a) to or on behalf of any person whose property and interests in property are blocked pursuant to §541.201(a) or any further Executive orders relating to the national emergency declared in E.O. 13288 of March 6, 2003, are authorized from funds originating outside the United States, provided that:
(a) Prior to receiving payment for legal services authorized pursuant to §541.507(a) rendered to persons whose property and interests in property are blocked pursuant to §541.201(a) or any further Executive orders relating to the national emergency declared in E.O. 13288 of March 6, 2003, the U.S. person that is an attorney, law firm, or legal services organization provides to OFAC a copy of a letter of engagement or a letter of intent to engage specifying the services to be performed and signed by the individual to whom such services are to be provided or, where services are to be provided to an entity, by a legal representative of the entity. The copy of a letter of engagement or a letter of intent to engage, accompanied by correspondence referencing this paragraph (a), is to be mailed to: Licensing Division, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., Annex, Washington, DC 20220.
(b) The funds received by U.S. persons as payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to §541.507(a) must not originate from:
(1) A source within the United States;
(2) Any source, wherever located, within the possession or control of a U.S. person; or
(3) Any individual or entity, other than the person on whose behalf the legal services authorized pursuant to §541.507(a) are to be provided, whose property and interests in property are blocked pursuant to any part of this chapter or any Executive order.
Note to paragraph (b) of §541.508: This paragraph authorizes the blocked person on whose behalf the legal services authorized pursuant to §541.507(a) are to be provided to make payments for authorized legal services using funds originating outside the United States that were not previously blocked. Nothing in this paragraph authorizes payments for legal services using funds in which any other person whose property and interests in property are blocked pursuant to §541.201(a), any other part of this chapter, or any Executive order holds an interest.
(c) Reports. (1) U.S. persons who receive payments in connection with legal services authorized pursuant to §541.507(a) must submit quarterly reports no later than 30 days following the end of the calendar quarter during which the payments were received providing information on the funds received. Such reports shall specify:
(i) The individual or entity from whom the funds originated and the amount of funds received; and
(ii) If applicable:
(A) The names of any individuals or entities providing related services to the U.S. person receiving payment in connection with authorized legal services, such as private investigators or expert witnesses;
(B) A general description of the services provided; and
(C) The amount of funds paid in connection with such services.
(2) In the event that no transactions occur or no funds are received during the reporting period, a statement is to be filed to that effect; and
(3) The reports, which must reference this section, are to be mailed to: Licensing Division, Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW., Annex, Washington, DC 20220.
Note 1 to §541.508: U.S. persons who receive payments in connection with legal services authorized pursuant to §541.507(a) do not need to obtain specific authorization to contract for related services that are ordinarily incident to the provision of those legal services, such as those provided by private investigators or expert witnesses, or to pay for such services. Additionally, U.S. persons do not need to obtain specific authorization to provide related services that are ordinarily incident to the provision of legal services authorized pursuant to §541.507(a).
[79 FR 39319, July 10, 2014]
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Notes Specific to this Provision:
Note the quarterly reporting and engagement letter requirements. Analogous provisions in most programs require annual reporting and to not call for the engagement letter in advance of payments.
Notes common to all "Payments for legal services from funds originating outside the United States" provisions:
This provision, issued in 2014 or thereafter and common to many blocking based sanctions programs, should be read in conjunction with the GL for the provision of legal services. This provision includes a "fresh funds" requirement and unusual sort of reporting requirement that is not a license application but is nevertheless necessary to benefit from the license. Refer to Notes Common to most Versions of the "Provision of Legal Services" General License (System Ed. Note), also addressing the payments issue. By all appearances, payments for legal services, when not generally licensed, are subject to favorable licensing policies whether or not a given set of sanctions regulations explicitly contains a GL for legal service payments. As discussed in the system note referred to, payments from blocked funds are sometimes authorized.
This is one of the many legal services-related GLs that applies on its face to “any further Executive orders relating to” the national emergency underlying the sanctions regulations at issue. This is notable because GLs do not apply by default in this fashion. See General Note on the Relationship Between Executive Orders, General Licenses and Sanctions Regulations Issued Pursuant to a Common National Emergency (System Ed. Note).