[Federal Register: November 7, 2005 (Volume 70, Number 214)]
[Rules and Regulations]
[Page 67339-67342]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07no05-1]
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Rules and Regulations
Federal Register
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[[Page 67339]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 950
RIN 3206-AK 71
Solicitation of Federal Civilian and Uniformed Service Personnel
for Contributions to Private Voluntary Organizations--Sanctions
Compliance Certification
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing a final
regulation for the Combined Federal Campaign (CFC). This regulation
requires that each federation and unaffiliated organization applying to
participate in the CFC must, as a condition of participation, certify
that it is in compliance with all statutes, Executive orders, and
regulations restricting or prohibiting U.S. persons from engaging in
transactions and dealings with countries, entities, and individuals
subject to economic sanctions administered by the U.S. Department of
the Treasury's Office of Foreign Assets Control (OFAC).
DATES: This rule is effective November 7, 2005.
FOR FURTHER INFORMATION CONTACT: Mark W. Lambert, Senior Compliance
Officer for the Office of CFC Operations, by telephone on (202) 606-
2564, by FAX on (202) 606-0902, or by e-mail at cfc@opm.gov.
SUPPLEMENTARY INFORMATION:
I. Background of This Rulemaking
As a condition of participating in the 2005 CFC, OPM required
organizations to certify that they do not knowingly employ individuals,
or contribute funds to entities or persons, on either the Department of
the Treasury's Office of Foreign Assets Control's Specially Designated
Nationals List or the Terrorist Exclusion List. OPM's Office of CFC
Operations issued guidance on compliance with that certification, CFC
Memorandum 2004-12, which described the rationale for the certification
and set forth instructions for checking these lists.
On March 29, 2005, OPM issued a Notice of Proposed Rulemaking (70
FR 15783 (March 29, 2005)) (NPRM) to modify the certification. The
proposed rule governs the solicitation of Federal civilian and
uniformed services personnel at the workplace for contributions to
private non-profit organizations through the CFC under the authority of
Executive Order 12353 (March 23, 1982). OPM has plenary authority under
5 CFR part 950 to administer the CFC in compliance with legal
standards.
As explained in the NPRM, the proposed regulation requires that
each federation and unaffiliated organization applying to participate
in the CFC must, as a condition of participation, certify that it is in
compliance with all statutes, Executive orders, and regulations
restricting or prohibiting U.S. persons from engaging in transactions
and dealings with countries, entities, and individuals subject to
economic sanctions administered by the U.S. Department of the
Treasury's Office of Foreign Assets Control (OFAC).
OFAC is the office principally responsible for administering and
enforcing U.S. economic sanctions programs imposed pursuant to the
International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.)
and other authorities. These programs further U.S. foreign policy and
national security goals and are directed primarily against foreign
states and nationals, including sponsors of global terrorism and
foreign narcotics traffickers. OFAC acts, pursuant to delegated
authority, under Presidential wartime and peacetime national emergency
powers. The programs administered by OFAC restrict or prohibit U.S.
persons from engaging in transactions and dealings with targeted
countries, entities, and individuals. OFAC publishes a list of
Specially Designated Nationals and Blocked Persons (SDN List). The
persons on the SDN List are subject to economic sanctions. The SDN List
and additional information relating to the economic sanctions programs
that OFAC administers are available at http://www.treas.gov/ofac
A link to the SDN List is available on the CFC Web site (http://www.opm.gov/cfc).
The vulnerability of the charitable sector to abuse by terrorists
and others underscores the importance of due diligence within the
charitable sector. For example, between October 2001 and December 2004,
the United States: (i) Imposed sanctions against five U.S.-based
charities and thirty-five non-U.S. charities for terrorist financing
activity under the authority of Executive Order 13224 (Sept. 23, 2001)
and the International Emergency Economic Powers Act, 50 U.S.C. 1701, et
seq.; (ii) convicted and sentenced the leader of a U.S.-based charity
for racketeering and fraud owing to terrorist-related support; (iii)
indicted more than one U.S.-based charity and its leadership under
pending terrorist financing charges; and (iv) investigated numerous
other charities operating in the U.S. that were suspected of
involvement in supporting terrorist activities.
Accordingly, in order to further the purposes of the economic
sanctions imposed by the President, to ensure that organizations
participating in the CFC are exercising appropriate diligence, and to
help safeguard the integrity of the CFC and the interests of Federal
employees who contribute to the CFC, the final regulation requires that
each federation, federation member, and unaffiliated organization
applying to participate in the CFC must, as a condition of
participation, complete the following certification:
I certify that the organization named in this application is in
compliance with all statutes, Executive orders, and regulations
restricting or prohibiting U.S. persons from engaging in
transactions and dealings with countries, entities, or individuals
subject to economic sanctions administered by the U.S. Department of
the Treasury's Office of Foreign Assets Control. The organization
named in this application is aware that a list of countries subject
to such sanctions, a list of Specially Designated Nationals and
Blocked Persons subject to such sanctions, and overviews and
guidelines for each such sanctions program can be found at http://www.treas.gov/ofac.
Should any change in circumstances pertaining to
this certification occur at any time, the organization will notify
OPM's Office of CFC Operations immediately.
[[Page 67340]]
II. Explanation of Changes
OPM received 13 written comments in response to the NPRM from: four
Local Federal Coordinating Committees, which oversee local campaign
activities; two Principal Combined Fund Organizations, which administer
local campaigns on behalf of Federal employees; four charitable
organizations that participate or have participated in the CFC; one
Federal agency; one Federal employee; and one citizen. OPM has found
these comments very helpful, and, in several important respects, the
final rule contains revisions made in response to these comments.
In general, each of the 13 commenters believed that the
certification and regulatory changes proposed in the NPRM were
improvements over the 2005 certification and OPM guidance. Five of the
13 commenters voiced their concurrence with the regulatory changes and
certification proposed in the NPRM.
One of the commenters wanted to know how the propositions in the
NPRM would affect the American Red Cross. OPM believes that the
regulatory change and certification will affect all organizations in
the same manner. Each organization wishing to participate in the CFC
will need to determine the steps necessary to ensure that it can
accurately certify to the sanctions compliance statement in order to
participate in the CFC.
Another commenter suggested clarifying the NPRM wording of 5 CFR
Sec. 950.605 to specify that federation members, as well as
federations and unaffiliated organizations, must certify to the
sanctions compliance statement. OPM agrees and has made the change to 5
CFR Sec. 950.605.
One commenter recommended that we implement the proposed
certification in the NPRM for the 2005 CFC. OPM disagrees with the
commenter, because the certification in the NPRM was not finalized as
of the application deadline for the 2005 CFC. The proposed regulation
remained subject to change based on comments from stakeholders during
the time period that decisions needed to be made on the eligibility of
CFC applicants for the 2005 CFC.
One commenter stated that the proposed certification in the NPRM
continued to contain ambiguities and recommended that OPM clarify these
ambiguities prior to finalizing the regulation. The primary concern of
the commenter was that it was not clear what an organization must do to
be compliant and whether or not checking government sanctions lists
would still be mandatory, as was required by the 2005 certification and
OPM guidance. The commenter asserted that if list-checking was
mandatory, OPM should clarify whether CFC Memorandum 2004-12 applies in
whole or in part to the proposed NPRM certification. The commenter
requested that these clarifications be made prior to the adoption of
the final rule, by the issuance by OPM of a second proposed rule
containing the clarifications and providing the public with a chance to
comment again.
Under the final rule, effective for 2006 and subsequent campaigns,
OPM does not mandate that applicants check the Specially Designated
Nationals (SDN) List or the Terrorist Exclusion List (TEL). Charities,
however, as a minimum, should follow the U.S. Department of the
Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices
for U.S. Based Charities, which is located on the OFAC Web site at
http://www.treas.gov/offices/enforcement/key-issues/protecting/index.shtml.
Thus, even though OPM will not mandate list-checking by
applicants for the 2006 and subsequent campaigns, it continues to
encourage charities to check the SDN List and the TEL as a way to help
ensure compliance with applicable regulations and as an important part
of implementing the type of risk-based compliance program proposed by
the Guidelines. It is the intention of OPM that applicants enhance
their efforts to ensure that funds collected through the CFC not be
used to finance unlawful activities or those who engage in them, not
that such efforts be diminished. This is not a departure from prior
policy. The new certification takes into account the fact that the
various charities participating in the CFC operate under unique
circumstances and it is ultimately their responsibility to ensure
compliance with the OFAC economic sanctions programs. OPM does not
believe it is necessary to issue a second proposed rule and will
continue to consider feedback from stakeholders throughout the current
and future campaigns.
One of the commenters recommended changes to the Supplementary
Information section of the NPRM to reflect that more than one U.S.
based charity and its leadership have been indicted for providing
material support or resources to terrorist organizations. The commenter
further requested that OPM clarify the entry that states ``(iv)
investigated numerous other charities operating in the U.S. and
suspected of terrorist financing activity'' to read ``(iv) investigated
numerous other charities operating in the U.S. suspected of involvement
in supporting terrorist activities.'' OPM agrees and made the changes
to the Supplementary Information in this final regulation. The
commenter also recommended a final regulation similar to the one issued
and used by the United States Agency for International Aid (USAID).
Although OPM reviewed and considered the regulation and guidance used
by USAID, OPM believes that the proposed certification, with revisions
based on public comments, more appropriately meets the needs of the
CFC. USAID enters into assistance agreements with organizations and
must ensure that it, as an entity, complies with the OFAC sanctions
program as well as criminal statutes against providing material support
to terrorist groups. As a result, USAID requires disclosure of
contractors and subgrantees of its grants, as well as compliance
verifications on these contractors and subgrantees. Although OPM
facilitates Federal employee support for charitable recipients through
the CFC, OPM does not provide direct support to organizations in the
manner that USAID does, nor does OPM collect comparable information
from its participating organizations. As a result, the burden of
ensuring compliance with the OFAC sanctions programs properly rests
with the charities that provide the charitable benefits, and that are
in any event charged with compliance with OFAC sanctions programs as a
matter of law. OPM does annually conduct a match of participating
charities at the national level against the OFAC list and requires
LFCCs to similarly conduct an annual match of local charitable
organizations against the OFAC list.
One commenter objected to the last sentence in the proposed
certification, stating that it implies the organization has violated
the law and raises Constitutional concerns of self-incrimination. The
commenter suggested that OPM revise this sentence to match the one used
in the 2005 certification. While OPM intends for voluntary compliance
with this regulation to include reporting instances of non-compliance,
OPM agrees that the suggested language accomplishes that purpose and
has made the change to the last sentence of the certification in this
final regulation.
One commenter proposed that the certification should be clarified
to recognize that no entity can ensure absolute compliance and to
provide a standard that allows each charity to plan its individual
approach to compliance. The commenter stated that by requiring a
charity to state that it is in compliance, CFC puts the applicant in
the potential position of having to
[[Page 67341]]
prove a negative: that there is no diversion of funds. The commenter
cited the certification used by USAID as providing a clearer and more
realistic statement: ``does not knowingly provide support or resources
* * * to the best of its current knowledge.'' The commenter pointed out
that the USAID guidance states that list checking may be used but is
not mandatory, defines ``material support'' and clarifies what a
charity must do if it believes recipients of its support are involved
in terrorist acts. The commenter also proposed that the CFC provide a
process for charities that discover noncompliance with the
certification during the fiscal year to cure the problem without
interrupting their participation in the program and that absent
negligence in oversight, the CFC should not attempt to recoup donations
already received when a charity comes forward to report and cure non-
compliance. The commenter stated that any other approach is inherently
unfair and discourages charities from coming forward to report and
correct problems. Finally, the commenter suggested the removal of OPM's
description of a ``pattern of abuse of U.S. and foreign charities''
included in the Supplementary Information in the NPRM. The commenter
based this suggestion on a citation from a 2004 research paper, which
disputed that U.S. charities were unwittingly being used to support
terrorist activities.
OPM agrees with some of the comments made by this commenter and
disagrees with others. As stated previously, OPM believes that this
final rule will provide the required clarification and that the best
practices guidance issued by the U.S. Department of the Treasury will
assist charities in their compliance efforts. As explained above, OPM
reviewed and considered the regulation and guidance used by USAID but
believes that the proposed certification, with revisions based on
public comments, more appropriately meets the needs of the CFC. In
regard to the comments on charities that discover instances of non-
compliance and are able to resolve them without affecting CFC
participation, the proposed rule and this final regulation state that
OPM ``will take steps it deems necessary.'' These steps may include the
items iterated in the NPRM and in this final regulation. Historically,
OPM has chosen to work with charities to correct occurrences of non-
compliance with CFC regulations and will continue to do so. However,
OPM recognizes that circumstances vary. Particularly with regard to
this sensitive issue, it has determined that it must reserve discretion
to act appropriately given unforeseen future events.
Finally, OPM opted to remove the language regarding ``a pattern of
abuse'' noted in the Supplementary Information of the NPRM. While more
than one U.S. based charity and its leadership have been indicted for
providing material support or revenues to terrorist organizations, OPM
acknowledges that there are differing views regarding this assertion.
Furthermore, OPM does not intend this NPRM to be the forum for this
debate.
The final commenter reiterated the comments provided by the
previously described commenter, which we already have addressed in this
discussion.
Waiver of Delayed Effective Date
Pursuant to 5 U.S.C. 553(d)(3), I find that good cause exists for
making this rule effective upon the date of publication of this notice.
In accordance with established practice, OPM will begin accepting
applications for the 2006 CFC on December 1, 2005. Waiting 30 days from
the date of publication of this notice to make the rule effective will
not provide sufficient time in advance of December 1, 2005, for the
application form for the 2006 CFC to be made available to parties
wishing to complete and submit the form.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities. Organizations
applying to the CFC have an existing, independent obligation to comply
with U.S. sanctions laws. Requiring them to execute a certification
with respect to such compliance is not burdensome. OPM has taken steps
to minimize the economic impact on small entities by including in the
text of the certification the OFAC Web site address at which extensive
information on U.S. sanctions is available via the internet free of
charge, including the text-searchable OFAC SDN List.
Executive Order 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with Executive Order 12866.
List of Subjects in 5 CFR Part 950
Administrative practice and procedures, Charitable contributions,
Government employees, Military personnel, Nonprofit organizations and
Reporting and recordkeeping requirements.
Office of Personnel Management.
Linda M. Springer,
Director.
0
Accordingly, OPM amends 5 CFR part 950 as follows:
PART 950--SOLICITATION OF FEDERAL CIVILIAN AND UNIFORMED SERVICE
PERSONNEL FOR CONTRIBUTIONS TO PRIVATE VOLUNTARY ORGANIZATIONS
0
1. The authority citation for part 950 continues to read as follows:
Authority: E.O. 12353 (March 23, 1982), 47 FR 12785 (March 25,
1982). 3 CFR, 1982 Comp., p. 139. E.O. 12404 (February 10, 1983), 48
FR 6685 (February 15, 1983), Pub. L. 100-202, and Pub. L. 102-393 (5
U.S.C. 1101 Note).
0
2. In Subpart A Sec. 950.104 add paragraph (b)(18) to read as follows:
Sec. 950.104 Local Federal Coordinating Committee responsibilities.
* * * * *
(b) * * *
(18) Determining whether each local federation, federation member,
and unaffiliated organization that applies to participate in the local
campaign has completed the sanctions compliance certification required
pursuant to Sec. 950.605. The LFCC must deny participation to any
federation or organization that has not completed the sanctions
compliance certification.
* * * * *
0
3. In Subpart F, add new Sec. 950.605 to read as follows:
Sec. 950.605 Sanctions compliance certification.
Each federation, federation member and unaffiliated organization
applying for participation in the CFC must, as a condition of
participation, complete a certification that it is in compliance with
all statutes, Executive orders, and regulations restricting or
prohibiting U.S. persons from engaging in transactions and dealings
with countries, entities or individuals subject to economic sanctions
administered by the U.S. Department of the Treasury's Office of Foreign
Assets Control (OFAC). Should any change in circumstances pertaining to
this certification occur at any time, the organization must notify
OPM's Office of CFC Operations immediately. OPM will take such steps as
it deems appropriate under the circumstances, including, but not
limited to, notifying OFAC and/or other enforcement authorities of such
change, suspending disbursement of CFC funds not yet disbursed,
retracting (to the extent practicable) CFC funds already
[[Page 67342]]
disbursed, and suspending or expelling the organization from the CFC.
[FR Doc. 05-22186 Filed 11-3-05; 11:13 am]
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