§ 597.513 Payments for legal services from funds originating outside the United States and the formation of legal defense funds.
(a)Payments from funds originating outside the United States.
(1)Effective December 7, 2010, receipt of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 597.505 to or on behalf of any person whose property and interests in property are blocked pursuant to § 597.201 are authorized from funds originating outside the United States, provided that the funds do not originate from: (i)A source within the United States;
(ii)Any source, wherever located, within the possession or control of a U.S. person; or
(iii)Any individual or entity, other than the person on whose behalf the legal
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§ 597.513 Payments for legal services from funds originating outside the United States and the formation of legal defense funds.
(a) Payments from funds originating outside the United States. (1) Effective December 7, 2010, receipt of payment of professional fees and reimbursement of incurred expenses for the provision of legal services authorized pursuant to § 597.505 to or on behalf of any person whose property and interests in property are blocked pursuant to § 597.201 are authorized from funds originating outside the United States, provided that the funds do not originate from:
(i) A source within the United States;
(ii) Any source, wherever located, within the possession or control of a U.S. person; or
(iii) Any individual or entity, other than the person on whose behalf the legal services authorized pursuant to § 597.505 are to be provided, whose property and interests in property are blocked pursuant to any part of this chapter or any Executive order or statute.
(2) Nothing in this paragraph (a) authorizes payments for legal services using funds in which any other person whose property and interests in property are blocked pursuant to § 597.201, any other part of this chapter, or any Executive order or statute has an interest.
(b) Legal defense funds. Effective December 7, 2010, U.S. persons that are attorneys, law firms, or legal services organizations are authorized to form legal defense funds from which payments of professional fees and reimbursement for expenses incurred in connection with the provision of legal services authorized pursuant to § 597.505 may be debited provided that:
(1) The legal defense fund must be held in a savings or checking account at a financial institution located in the United States;
(2) Prior to debiting the legal defense fund, the U.S. person responsible for establishing the legal defense fund must submit the following information 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 name of the individual or entity responsible for establishing the legal defense fund; the name of the financial institution at which the account for the legal defense fund will be held; a point of contact at the financial institution holding the account for the legal defense fund; and the account name and account number for the legal defense fund. The foregoing information must be accompanied by correspondence referencing this paragraph (b) and is to be submitted to OFAC at OFACReport@treasury.gov with this section number in the subject line.
(3) The legal defense fund may not receive funds from a person whose property and interests in property are blocked pursuant to § 597.201 or any other part of this chapter or any Executive order or statute; and
(4) The U.S. person responsible for establishing the legal defense fund must notify the financial institution at which the account for the legal defense fund is held that the account may only be debited to make payments of professional fees and reimburse expenses incurred in connection with the provision of legal services authorized pursuant to § 597.505.
Note 1 to paragraph (b):
Any funds remaining in a legal defense fund account after all payments of professional fees and reimbursement of incurred expenses authorized pursuant to this paragraph have been made or upon termination of the legal services for which payment is authorized pursuant to this paragraph are property in which the person to or on whose behalf the legal services were rendered has an interest and is subject to the prohibitions of this part. Persons in the possession or control of such remaining funds may apply for the unblocking of the funds by following the procedures set forth at § 501.801 of this chapter.
(c) Records. Consistent with §§ 501.601 and 501.602 of this chapter, U.S. persons who receive payments pursuant to paragraph (a) or (b) of this section must retain for ten years from the date of the relevant payment, and furnish to OFAC on demand, a record that specifies the following for each payment:
(1) The individual or entity from whom the funds originated and the amount of funds received; and
(2) If applicable:
(i) 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;
(ii) A general description of the services provided; and
(iii) The amount of funds paid in connection with such services.
[75 FR 75909, Dec. 7, 2010, as amended at 89 FR 103650, Dec. 19, 2024]