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Federal reserve Ba n k o f Dallas
DALLAS, TEXAS

75222

Circular No. 81-52
March 11, 1981

IRANIAN ASSETS CONTROL REGULATIONS
Amendments

TO ALL MEMBER BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The O ffice of Foreign A ssets Control is amending the Iranian A ssets
Control Regulations. The needs and purposes o f the amendments are outlined in
detail in the copies of two Federal R egister documents and a press release dated
February 24, 1981, issued by the Department o f the Treasury which are printed
on the following pages. The e f fe c tiv e date of the amendments was January 19,
1981.
Questions regarding the amendments should be directed to Raymond
W. Konan, Chief Counsel, O ffice of Foreign A ssets Control, Department of the
Treasury, Washington, D. C. 20220, Tel. (202-376-0236).
Sincerely yours,
William H. Wallace
First Vice President

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

DepartmentoftheTREASURY

FOR IMMEDIATE RELEASE
February 24; 1981

CONTACT:

Robert Levine
(202) 566-5158

TREASURY FILES REGULATIONS ON IRANIAN ASSETS AGREEMENT
The Treasury Department today filed with the Federal
Register regulations implementing various Executive Orders
signed on January 19, 1981, by President Carter and an
Executive Order signed today by President Reagan. These
orders and regulations implement the agreements of January 19/
1981, relating to the release of the hostages and the settlement
of other disputes between the United States and Iran and their
nationals.
These regulations, in addition to repeating the terms of
the Executive Orders, include the following:
1- A requirement that Iranian bank deposits in the U.S.
and other funds and securities be transferred to the Federal
Reserve Bank of New York as soon as reasonably practicable.
Until further notice the U.S. will not seek civil or criminal
sanctions against those not making required transfers while
litigation challenging the authority of the U.S. to order these
transfers is pending. These deposits, funds and securities are
the source of the initial $1 billion deposit by Iran in the
fund being set up to pay arbitral awards in favor of U.S.
nationals. (S535.221(b))
2.
A requirement that other Iranian properties be trans­
ferred to Iran as directed by them. This requirement does not
apply to properties as to which there is a legitimate contest
over Iran's right to these properties. Properties may be
considered contested if the holder of the assets reasonably
believes that a court would not require it to transfer the
asset for reasons other than the existence of attachments,
injunctions or similar orders. These contested properties
may continue to be retained by the holder of the property
until Iran's entitlement to the property is finally determined.
(S535.333)

2

3. Statements making clear that none of the Executive
Orders affects standby letters of credit, performance or payment
bonds, or similar obligations. These instruments remain subject
to the same controls as existed before January 19, 1981 under
SS3S.568 of the regulations.- The claims agreement between the
U.S. and Iran allows disputes axis ing out of transactions which
are subject to these instruments to be resolved in the arbitral
tribunal. (SSS3S.438, 535.333)
4. A suspension of those claims which may be presented
to the arbitral tribunal so that they cannot not be pursued in
U.S. courts. Anyone not eligible to go before the tribunal
may pursue his rights in U.S. courts. All attachments as to
the Iranian property blocked on January 19, 1981, are nullified,
however, and future attachments against these properties are
barred. Litigants not barred from pursuing their remedies in
U.S. courts, therefore, must find other Iranian assets to satisfy
any judgment they may receive.
(SS535.222, 535.218, 535.504)
5. A statement that new transactions with Iran involving
previously unblocked property will not be subject to the freeze
restrictions.
(S535.579)
6. Implementation of the Executive Order regarding the assets
of the former Shah and his close relatives by establishing a
procedure whereby Iran is to certify those who have been served
in litigation in the U.S.

3

DEPARTMENT OF TEE TREASURY
OFFICE OF FOREIGN ASSETS CONTROL
31 CFR PART 535
IRANIAN ASSETS CONTROL REGULATIONS

Restrictions on Property of the Former Shah of Iran
AGENCY:

Office of Foreign Assets Control.

ACTION:

Final Rule.

SUMMARY: The Office of Foreign Assets Control Is amending the Iranian Assets Control
Regulations. The purpose of the amendment Is to prohibit transfers of all property
and assets located in the United States within the control of the estate of the
former Shah of Iran or any close relative of the former Shah served as a defendant
in litigation in courts within the United States brought by Iran seeking the return
of property alleged to belong to Iran. The need for the amendment is to implement
the provisions of Executive Order No. 12284, signed by the President on January 19,
1981, requiring the blocking of such property and assets to protect the rights of
litigants in courts within the United States, and directing the Secretary of the
Treasury to require reports on such property and assets. The effect of the amendment
is that all transfers of such property and assets will be prohibited when Iran proves
to the Office of Foreign Assets Control (OFAC) that there has been service in such
cases on such persons and OFAC publishes a notice to this effect in the Federal
Register.
EFFECTIVE DATE:

January 19, 1981.

FOR FURTHER INFORMATION CONTACT: Raymond W. Konan, Chief Counsel, Office of Foreign
Assets Control, Department of the Treasury, Washington, D.C. 20220, Tel. (202-376-0236).
SUPPLEMENTARY INFORMATION: Since the regulations involve a foreign affairs function,
the provisions of the Administrative Procedure Act, 5 U.S.C. 553, requiring notice
of proposed rule-making, opportunity for public participation and delay In effective
date are Inapplicable.
Pursuant to Executive Order 12284 of January 19, 1981 the Office of Foreign
Assets Control will conduct a census of property and assets within the control of
the estate of the former Shah or close relatives of the former Shah served in litiga­
tion by Iran. Litigation has been filed naming numerous individuals. To avoid
duplication, the census will be temporarily deferred to allow a period of time in
which the Government of Iran may provide proof of service of defendants to the
Office of Foreign Assets Control.
31 CFR Part 535 is amended as follows:
1.

Section 535.217 is added to read as follows:

Section 535.217

Blocking of property of the former Shah of Iran and
of certain other Iranian nationals.

4

a. For the punpose of protecting the rights of litigants in courts within
the United States, all property and assets located in the United States in the
control of the estate of Mohammad Reza Pahlavl, the former Shah of Iran, or any
close relative of the former Shah served as a defendant in litigation in such
courts brought by Iran seeking the return of property alleged to belong to Iran,
is blocked as to each such estate or person, until all such litigation against
such estate or person is finally terminated. This provision shall apply only
to such persons as to which Iran has furnished proof of service to the Office
of Foreign Assets Control and which the Office has identified in paragraph (b)
of this section.
b.

[Reserved]

c.

The effective date of this section is January 19, 1981.

Section 535.580 is added to read as follows:
Section 535.580

Necessary living expenses of relatives of the
former Shah of Iran.

The transfer, payment or^withdrawal of property described in section 535.217
is authorized to the extent necessary to pay living expenses of any individual
listed in that section. Living expenses for this purpose shall Include food,
housing, transportation, security and other personal expenses.

5

Dated:

February 24, 1981♦

(signed) Dennis M. O'Connell
Dennis M. O'Connell
Director

Approved:

(signed) John P. Simpson
John P. Simpson
Acting Assistant Secretary (Enforcement and Operation)

Filed:

February 24, 1981.

Publication date:

February 26, 1981.

[Authority: Sec. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706;
E.O. No. 12170, 44 FR 65729; E.0. No. 12211, 45 FR 26685; E.O. No. 12284,
46 FR 7929.1

6

IN ADVANCE OF PRINTED COPY

DEPARTMENT OF THE TREASURY
OFFICE OF FOREIGN ASSETS CONTROL
31 CFR PART 535
IRANIAN ASSETS CONTROL REGULATIONS

AGENCY:

Office of Foreign Assets Control.

ACTION:

Final Rule.

SUMMARY: The Office of Foreign Assets Control is amending the Iranian Assets
Control Regulations. The purposes of the amendments are to add new directive
provisions and related definitions and interpretations; and to revoke certain
trade and financial sanctions against Iran, in order to implement the agree­
ments reached between the United States and Iran on January 19, 1981, and
related agreements (the "agreements"), which commit the United States and Iran
to take certain steps to free the American hostages and to resolve certain
claims between the United States and its nationals and Iran and its nationals.
The need for the amendments is (a) to implement Executive Order 12276, signed
by the President on January 19, 1981, providing for the establishment of an
Escrow Agreement and to implement Executive Orders 12277, 12278, 12279, 12280
and 12281 of the same date licensing, authorizing, directing and compelling:
(1) the transfer by the Federal Reserve Bank of New York of all assets held by
it for the Government of Iran and its entities ("Iran") to accounts held for
the Federal Reserve Bank of New York at the Bank of England, (2) the transfer
by overseas branches and offices of United States banks of all deposits and
securities held by them for Iran to the account of the Federal Reserve Bank of
New York at the Bank of England, (3) the transfer by domestic banks of all
funds, securities and deposits held by them for Iran to the Federal Reserve Bank
of New York, (4) the transfer by persons which are not banking institutions of
funds or securities of Iran to the Federal Reserve Bank of New York and (5) the
transfer by all persons subject to the jurisdiction of the United States of
certain properties, not including funds and securities, owned by Iran, as direc­
ted by the Government of Iran acting through its authorized agent; (b) to
implement Executive Order 12282 of January 19, 1981, revoking various sanctions
and prohibitions against transactions involving Iran; and Executive Order 12283
of January 19, 1981, barring the prosecution of certain claims against Iran
arising from specified occurrences and terminating any previously instituted
judicial proceedings based upon such claims; and (c) to revoke miscellaneous
provisions rendered unnecessary by the above described amendments. Certain of
the amendments are also needed for purposes of prohibiting and nullifying the
acquisition, by litigation or otherwise, of any rights or interests in the
assets subject to the transfer directives which would interfere with the trans­
fer of those assets and with implementation of the agreements between the United
States and Iran.
The effect of the amendments is that prohibitions in the Regulations on the
transfer of the assets covered by the directives, as well as rights and interests

7

in the assets other than those of the Government of Iran or its entities will be
removed so that the agreements can be effectuated. The amendments also have the
effect of revoking miscellaneous sanctions against Iran; and of providing for the
non-prosecution of certain claims against Iran.
EFFECTIVE DATE:

January 19, 1981

FOR FURTHER INFORMATION CONTACT: Raymond W. Konan, Chief Counsel, Office of
Foreign Assets Control, Department of the Treasury, Washington, D.C. 20220,
202/376-0236.
SUPPLEMENTARY INFORMATION: Since the Regulations involve a foreign affairs func­
tion, the provisions of the Administrative Procedure Act, 5 U.S.C. 553, requiring
notice of proposed rulemaking, opportunity for public participation, and delay in
effective date are inapplicable.
The President has signed a series of executive orders implementing the agree­
ments between the U.S. and Iran.
Executive Order 12276 of January 19, 1981, authorizes the Secretary of the
Treasury to enter into and to license, authorize, direct and compel any appropri­
ate official and/or the Federal Reserve Bank of New York, as fiscal agent of the
United States, to enter into escrow or related agreements under which certain
money and other assets shall be transferred in implementation of the agreements
between the United States and Iran. This Executive Order also authorizes the
Secretary of the Treasury to license, authorize, direct and compel the Federal
Reserve Bank of New York to receive certain money and other assets of the Gov­
ernment of Iran.
Executive Order 12277 of January 19, 1981, licenses, authorizes, directs
and compels transfers into accounts at the Bank of England, and then into the
escrow account, of assets of the Government of Iran held by the Federal Reserve
Bank of New York.
Executive Order 12278 of January 19, 1981, licenses, authorizes, directs
and compels the transfer of funds, securities and deposits of Iran, including
interest at commercially reasonable rates, held by overseas branches and offices
of United States banks to the account of the Federal Reserve Bank of New York
at the Bank of England, to be held or transferred as directed by the Secretary
of the Treasury. The assets transferred pursuant to this Executive Order are
to be further transferred as provided for in the agreements.
Executive Order 12279 of January 19, 1981, licenses, authorizes, directs
and compels the transfer of funds, securities and deposits of Iran, including
interest at commercially reasonable rates, held by domestic branches or offices
of banks which branches or offices are located within the United States to the
Federal Reserve Bank of New York to be held or transferred as directed by the
Secretary of the Treasury.
Executive Order 12280 of January 19, 1981, licenses, authorizes, directs
and compels the transfer of funds and securities of Iran held by persons which
are not banking institutions to the Federal Reserve Bank of New York to be held
or transferred by the Secretary of the Treasury. This Executive Order applies
to both overseas and domestically held assets.

8

Executive Order 12281 of January 19, 1981, licenses, authorizes, directs
and compels the transfer by all persons subject to the jurisdiction of the
United States of properties, not including funds and securities, owned by Iran,
as directed by the Government of Iran acting through its authorized agent.
Executive Order 12282 of January 19, 1981, revokes various sanctions, and
prohibitions against transactions involving Iran.
Executive Order 12283 of January 19, 1981, bars the prosecution of certain
claims against Iran arising from specified occurrences and terminating any pre­
viously instituted judicial proceedings based upon such claims.
These amendments to the Iranian Assets Control Regulations implement the
above-described executive orders and are summarized below.
1.

Direction to establish an escrow agreement.

New section 535.210(a) licenses, authorizes, directs and compels the
Federal Reserve Bank of New York as fiscal agent of the United States to enter
into escrow or related agreements under which certain money and other assets
will be transferred to the escrow account. In connection with the implementation
of the escrow agreement, section 535.210(b) licenses, authorizes, directs and
compels the Federal Reserve Bank of New York, as fiscal agent of the United States,
to receive money and other assets in which Iran has an interest, and to hold or to
transfer those assets in such a manner as the Secretary of the Treasury deems nec­
essary to fulfill the rights and obligations of the United States under the agree­
ments between the United States and Iran.
2. Direction involving transfers of assets held by the Federal Reserve Bank of
New York.
New section 535.211
Reserve Bank of New York
subsequently to transfer
held by it for Iran when
Treasury.

licenses, authorizes, directs and compels the Federal
to transfer to its account at the Bank of England, and
to the escrow account, all gold bullion and other assets
and in the manner directed by the Secretary of the

3. Direction to transfer assets held by overseas branches and offices of United
States banks.
New section 535.212 licenses, authorizes, directs and compels any overseas
branch or office of a United States bank which, on or after 8:10 a.m., e.s.t.,
on November 14, 1979, has been or is in possession of funds or securities owned
by Iran, or has carried or is carrying on its books deposits standing to the
credit of Iran to transfer such assets, including interest at commercially rea­
sonable rates, to the account of the Federal Reserve Bank of New York at the
Bank of England, to be held or transferred as directed by the Secretary of the
Treasury. The funds, securities and deposits described in this section shall be
further transferred as provided for in the agreements between the United States
and Iran.
Section 535.212(b) provides that any bank subject to the jurisdiction of
the United States that executed set-offs against deposits or securities held by

9

them for Iran are authorized and directed to cancel such set-offs and to
include in the directed transfer all assets subject to the set-offs, including
interest at commercially reasonable rates.
4.

Direction to transfer assets held by domestic banks.

New section 535.213 licenses, authorizes, directs and compels the transfer
by domestic banks of all funds, securities and deposits held by them for Iran,
including interest from November 14, 1979, at commercially reasonable rates, to
the Federal Reserve Bank of New York, to be held or transferred as directed by
the Secretary of the Treasury.
5.

Direction to transfer other financial assets.

New section 535.214 licenses, authorizes, directs and compels persons sub­
ject to the jurisdiction of the United States which are not banking institutions
to transfer all funds or securities of Iran in their possession or control to
the Federal Reserve Bank of New York, to be held or transferred as directed by
the Secretary of the Treasury. However, such transfers are not required until
certain disputes as to Iran's entitlement are resolved.
6.

Direction to transfer other properties.

New section 535.215 licenses, authorizes, directs and compels all persons
subject to the jurisdiction of the United States to transfer properties, not
including funds and securities, which are owned by Iran and are in the posses­
sion or control of such persons as directed by the Government of Iran, acting
through its authorized agent. (New section 535.333 defines the term "proper­
ties" as used in section 535.215.)
7.

Certain claims against Iran barred.

New section 535.216 bars persons subject to the jurisdiction of the United
States from prosecuting, in any court within the United States or elsewhere, any
claim against the Government of Iran arising out of certain specified events.
These events relate to the seizure and detention of the hostages, injury to
United States property or property of United States nationals within the United
States Embassy compound in Tehran and injury to United States nationals or their
property as a result of popular movements in the course of the Islamic Revolution
in Iran which were not an act of the Government of Iran.
Section 535.216 also bars the prosecution of such claims in any court within
the United States by persons who are not United States nationals.
Section 535.216 bars further action in any previously instituted judicial
proceedings which are based upon any of the above-described claims and provides
that all such proceedings shall be terminated. In addition, section 535.216 pro­
hibits the enforcement of any judicial order issued in the course of such
proceedings.

10

8. Prohibitions with respect to assets subject to transfer directives;
Nullification of attachments and similar remedies; Prohibitions on judicial
action.
New section 535.218(a) revokes and withdraws all licenses and authorizations
for acquiring or exercising any right, power or privilege by court order, attach­
ment or otherwise, with respect to any of the properties covered by the directives
in sections 535.211 to 535.215. New section 535.218(b) provides that all rights,
powers and privileges relating to the assets described in sections 535.211 to
535.215 which derive from any attachment, injunction, other like proceedings or
process, or other action in any litigation after November 14, 1979, at 8:10 a.m.,
e.s.t., including those derived from section 535.504 of the Regulations, whether
acquired by court order or otherwise, are nullified. The nullification does not
apply to rights, powers or privileges of Iran. New section 535.218(c) prohibits
the acquisition or exercise of any right, power or privilege with respect to any
property (and any income earned thereon) referred to in the directives in sec­
tions 535.211 to 535.215. New section 535.218(d) provides that the prohibition
on the acquisition of rights contained in section 535.218(c) does not apply to
the Government of Iran, its agencies, instrumentalities or controlled entities.
New section 535.218(e) provides that section 535.218 does not revoke or withdraw
certain specific licenses, issued prior to January 19, 1981, until April 15, 1981.
9. Compliance with this part a legal acquittance and discharge of the obligation
of any person.
New section 535.219, pursuant to Section 203(a)(3) of the International
Emergency Economic Powers Act, states that compliance in good faith with the
directive provisions in sections 535.210 to 535.215 or any other orders, regula­
tions, instructions or directions which license, authorize, direct or
compel the
transfer of assets referred to in those sections shall, to the extent thereof, be
a full acquittance and discharge of all purposes of theobligations of the person
making the same. No person shall be held liable in any United States
court for
such good faith compliance.
10.

Timing of transactions.

New section 535.220 provides that transfers of overseas bank assets required
by section 535.212 shall be executed no later than 6:00 a.m., e.s.t., January 20,
1981.
11.

Compliance with other directive provisions.

New section 535.221(a) provides that compliance with the directive provisions
of sections 535.213 and 535.214 pertaining to domestic bank assets and other finan­
cial assets requires that persons affected by these directives implement them as
soon as reasonably practicable. New section 535.221(b) states the U.S. policy,
until further notice, not to seek sanctions against any party who does not make any
transfer required by sections 535.213 to 535.215 while challenges to the authority
of the United States to order the transfers are pending in U.S. courts.

12.

Suspension of claims eligible for Claims Tribunal.

New section 535.222 provides (a) that all claims which may be presented
to the Iran-United States Claims Tribunal provided for in the agreements
between the United States and Iran and all claims for equitable or other
relief in connection with such claims, are suspended, (b) that the section
does not prohibit assertions of defense, set-off or counterclaim in any pending
or future judicial proceeding commenced by Iran, (c) that the section does not
preclude actions to toll periods of limitations for commencement of action,
(d) that dismissal for want of prosecution is not required, (e) that the suspen­
sion shall terminate if the Claims Tribunal determines it lacks jurisdiction,
(f) that a determination on the merits by the Tribunal shall operate as a final
resolution and discharge of the claim, provided that full payment of the award
is paid, and (g) that the section does not apply to certain claims concerning
standby letters of credit, performance or payment bonds or other similar instru­
ments.
13.

Definition of "properties."

New section 535.333 defines "properties" as used in section 535.215 to
include only uncontested and non-contingent liabilities and property interests
of Iran. Specifically excluded are (1) funds, (2) securities, (3) bank deposits,
and (4) obligations under standby letters of credit or similar instruments. Prop­
erties are not Iranian properties owned by Iran unless necessary obligations,
charges and fees are discharged.
14.

Definition of an act of the Government of Iran.

New section 535.334 defines an act of the Government of Iran as including
any acts ordered, authorized, allowed or ratified by Iran or its entities.
15.

Definition of "claim arising out of events in Iran."

New section 535.335 states that a claim is one arising out of events in Iran
ofthe type specified in section 535.216 only if such event is the specific act
that is the basis of the claim.
16.

Definition of "funds."

New section 535.337 defines "funds" as used in this part to mean currency
and coin, trust, escrow and special funds held by non-banking institutions.
17.

Status of Central Bank of Iran.

New section 535.433 provides that, for purposes of this part, the Central
Bank of Iran (Bank Markazi Iran) is an agency, instrumentality and controlled
entity of the Government of Iran.
18.

Effect on other authorities.

New section 535.437 states that nothing in this part relieves any persons
from the necessity of securing licenses or other authorizations as required by
the Secretary of State, the Secretary of Comnerce or other relevant agency prior
to executing the transactions authorized or directed by this part.

12

19.

Standby letters of credit.

New section 535.438 states that nothing contained in sections 535.212,
535.213 and 535.214 or in any other provision, revocation or amendment affects
the prohibition in section 535.568 on the payment under certain standby letters
of credit, performance or payment bonds and similar obligations. Section
535.568(a) prohibits the payment under a standby letter of credit into a
blocked account provided that the account party avails itself of the specific
licensing procedure to establish a blocked account on its books. The prohi­
bition and the procedure remain in effect. The section also provides that the
term "funds and securities" as used in this part excludes the substitute blocked
accounts established under section 535.568 relating to standby letters of credit,
performance or payment bonds and similar obligations.
20.

Commercially reasonable interest rates.

New section 535.440 provides that the meaning of the term "commercially
reasonable rates" depends on the particular circumstances of the deposit.
21. Exclusion of ore-judgment attachments and similar proceedings from general
license for judicial proceedings.
The general license in section 535.504 for judicial proceedings is amended
to exclude pre-judgment attachments and other proceedings of similar or analogous
effect with respect to property subject to sections 535.211 through 535.215 and
reference is made to the claims suspension provisions of section 535.222.
22.

Authorization for new transactions.

New section 535.579 authorizes new transactions involving property of Iran.
Transactions involving standby letters of credit, performance or payment bonds
and similar obligations remain subject to the provisions of section 535.568.
The section also highlights that attachment, injunction and similar orders are
prohibited with respect to property not blocked on January 19, 1981, which is or
becomes subject to U.S. jurisdiction for the express purpose of settling claims
against Iran.
23.

Reports on transfers of other assets.

Section 535.618 provides that any person failing to transfer property as
directed by Iran is required to submit a brief report to the Office of Foreign
Assets Control explaining why the property was not transferred.
24.

Revocation of general license for overseas set-offs.

Section 535.902 is amended to revoke the general license in paragraph (a)
authorizing overseas set-offs and by adding paragraph (c) to provide that for
purposes of this section, set-offs include combinations of accounts or any similar
actions.

13

25.

Revocation of sanctions, prohibitions and obsolete provisions.

These amendments revoke various sanctions and prohibitions against trans­
actions involving Iran, including certain prohibitions against imports from Iran,
financial transactions with Iran, exports to Iran, and travel-related transactions.
They also revoke miscellaneous definitions, interpretations and statements of
licensing policy that are obsolete as the result of the above amendments.
Additional sections of the existing regulations may be revoked and additional
provisions may be added, as appropriate.
1.

Section 535.210 is added as follows:
Section 535.210 Direction for establishing an escrow agreement.

(a) The Federal Reserve Bank of New York, as fiscal agent of the United
States, is licensed, authorized, directed and compelled to enter into escrow and
related agreements under which certain money and other assets shall be credited
by the Bank of England to escrow accounts.
(b) The Federal Reserve Bank of New York is licensed, authorized, directed
and compelled, as fiscal agent of the United States, to receive certain money and
other assets in which Iran or its agencies, instrumentalities or controlled entities
have an interest and to hold or transfer such money and other assets, and any
earnings or interest payable thereon, in such manner and at such times as the Secre­
tary of the Treasury deems necessary to fulfill the rights and obligations of the
United States under the Declaration of the government of the Democratic and Popular
Republic of Algeria dated January 19, 1981, and the Undertakings of the Government
of the United States of America and the Government of the Islamic Republic of Iran
with respect to the Declaration of the Government of the Democratic and Popular
Republic of Algeria, and the escrow and related agreements described in paragraph
(a) of this section. Such money and other assets may be invested, or not, at the
discretion of the Federal Reserve Bank of New York, as fiscal agent of the United
States.
2.

Section 535.211 is added as follows:
Section 535.211 Direction involving transfers by the Federal Reserve Bank
concerning certain Iranian property.

The Federal Reserve Bank of New York is licensed, authorized, directed and
compelled to transfer to its account at the Bank of England, and subsequently to
transfer to accounts in the name of the Central Bank of Algeria as Escrow Agent
at the Bank of England that are established pursuant to an escrow and related
agreements approved by the Secretary of the Treasury, all gold bullion, together
with all other assets in its custody (or the cash equivalent thereof), of Iran
or its agencies, instrumentalities or controlled entities. Such transfers, and
whatever further related transactions are deemed appropriate by the Secretary of
the Treasury, shall be executed when and in the manner directed by the Secretary
of the Treasury.

14

3.

Section 535.212 is added as follows:

Section 535.212

Direction to transfer property In which Iran or an
Iranian entity has an interest by branches and offices
of United States banks located outside the United States*

(a) Any branch or office of a United States bank or subsidiary thereof,
which branch, office or subsidiary is located outside the territory of the
United States, and which, on or after 8:10 a.m., e.s.t., on November 14, 1979,
(a) has been or is in possession of funds- or securities legally or beneficially
owned by the Government of Iran or its agencies, instrumentalities, or con­
trolled entities, or (b) has carried or is carrying on its books deposits stand­
ing to the credit of or beneficially owned by such government, its agencies,
instrumentalities or controlled entities, is licensed, authorized, directed and
compelled to transfer such funds, securities and deposits, held on January 19,
1981, including interest from November 14, 1979, at commercially reasonable
rates, to the account of the Federal Reserve Bank of New York, as fiscal agent
of the U.S., at the Bank of England, to be held or transferred as directed by
the Secretary of the Treasury. The funds, securities and deposits described
in this section shall be further transferred as provided for in the Declara­
tions of the Government of the Democratic and Popular Republic of Algeria and
the Undertakings of the Government of the United States of America and the
Government of the Islamic Republic of Iran with respect to the Declaration.
(b) Any banking institution subject to the jurisdiction of the United
States that has executed a set-off on or after 8:10 a.m., e.s.t., November 14,
1979, against Iranian funds, securities or deposits referred to in paragraph (a)
of this section is hereby licensed, authorized, directed and compelled to can­
cel such set-off and to transfer all funds, securities and deposits which have
been subject to such set-off, including interest from November 14, 1979, at
commercially reasonable rates, pursuant to the provisions of paragraph (a) of
this section.
4.

Section 535.213 is added as follows:
Section 535.213

Direction involving property held by offices of banks in
the U.S. in which Iran or an Iranian Entity has an interest.

(a) Any branch or office of a bank, which branch or office is located within
the United States and is, on the effective date of this section, either (a) in
possession of funds or securities legally or beneficially owned by the Government
of Iran or its agencies, instrumentalities or controlled entities, or (b) carrying
on its books deposits standing to the credit of or beneficially owned by such
government or its agencies, instrumentalities or controlled entities, is licensed,
authorized, directed and compelled to transfer such funds, securities and deposits,
held on January 19, 1981, including interest from November 14, 1979, at commer­
cially reasonable rates, to the Federal Reserve Bank of New York, as fiscal agent
of the U.S., to be held or transferred as directed by the Secretary of the Treasury.
(b) Transfers of funds, securities or deposits under subsection (a) above
shall be in accordance with the provisions of section 535.221 of this part.

15

(c)
Any funds, securities or deposits subject to a valid attachment,
injunction or other like proceeding or process not affected by section 535.218
need not be transferred as otherwise required by this section.
5.

Section 535.214 is added as follows:
Section 535.214

Direction involving other financial assets in which Iran
or an Iranian entity has an interest held by any person
subject to the jurisdiction of the United States.

(a) Any person subject to the jurisdiction of the United States which is
not a banking institution and is on January 19, 1981, in possession or control
of funds or securities of Iran or its agencies, instrumentalities or controlled
entities is licensed, authorized, directed and compelled to transfer such funds
or securities to the Federal Reserve Bank of New York, as fiscal agent of the
U.S., to be held or transferred as directed by the Secretary of the Treasury.
However, such funds and securities need not be transferred until any disputes
(not relating to any attachment, injunction or similar order) as to the
entitlement of Iran and its entities to them are resolved.
(b) Transfers of funds, securities or deposits under subsection (a) above
shall be in accordance with the provisions of section 535.221 of this part.
6.

Section 535.215 is added as follows:
Section 535.215

Direction involving other properties in which Iran or an
Iranian entity has an interest held by any person subject
to-the jurisdiction of the United States.

All persons subject to the jurisdiction of the United States in possession
or control of properties, as defined in section 535.333 of this part, not includ­
ing funds and securities owned by Iran or its agencies, instrumentalities or con­
trolled entities are licensed, authorized, directed and compelled to transfer
such properties held on January 19, 1981, as directed after that date by the
Government of Iran, acting through its authorized agent. Except where specifi­
cally stated, this license, authorization and direction does not relieve persons
subject to the jurisdiction of the United States from existing legal requirements
other than those based upon the International Emergency Economic Powers Act.
7.

Section 535.216 is added as follows:
Section 535.216

Prohibition against prosecution of certain claims.

(a)
Persons subject to the jurisdiction of the United States are prohibited
from prosecuting in any court within the United States or elsewhere, whether or
not litigation was commenced before or after January 19, 1981, any claim against
the Government of Iran arising out of events occurring before January 19, 1981,
relating to:
1.

the seizure of the hostages on November 4, 1979;

2.

the subsequent detention of such hostages;

16

3.

injury to United States property or property of United States
nationals within the United States Embassy compound in Tehran
after November 3, 1979; or

4.

injury to United States nationals or their property as a result of
popular movements in the course of the Islamic Revolution in Iran
which were not an act of the Government of Iran.

(b) Any persons who are not United States nationals are prohibited from
prosecuting any claim described in paragraph (a) of this section in any court
within the United States.
(c)
tive date
effective
graph (a)

No further action, measure or process shall be taken after the effec­
of this section in any judicial proceeding instituted before the
date of this section which is based upon any claim described in para­
of this section, and all such proceedings shall be terminated.

(d) No judicial order issued in the course of the proceedings described in
paragraph (c) of this section shall be enforced in any way.
8.

Section 535.218 is added as follows:
Section 535.218

Prohibitions and nullifications with respect to property
described in sections 535.211. 535.212. 535.213. 535.214
and 535.215.

(a) All licenses and authorizations for acquiring or exercising any right,
power or privilege, by court order, attachment, or otherwise, including the
license contained in section 535.504, with respect to the property described in
sections 535.211, 535.212, 535.213, 535.214 and 535.215 are revoked and with­
drawn.
(b) All rights, powers and privileges relating to the property described in
sections 535.211, 535.212, 535.213, 535.214 and 535.215 and which derive from any
attachment, injunction, other like proceedings or process, or other action in any
litigation after November 14, 1979, at 8:10 a.m., e.s.t., including those derived
from section 535.504, other than rights, powers and privileges of the Government
of Iran and its agencies, instrumentalities and controlled entities, whether
acquired by court order or otherwise, are nullified, and all persons claiming
any such right, power or privilege are hereafter barred from exercising any such
right.
(c) All persons subject to the jurisdiction of the United States are prohi­
bited from acquiring or exercising any right, power or privilege, whether by
court order or otherwise, with respect to property (and any income earned thereon)
referred to in sections 535.211, 535.212, 535.213, 535.214 and 535.215.
(d) The prohibitions contained in paragraph (c) of this section shall not
apply to Iran, its agencies, instrumentalities or controlled entities.
(e) This section does not revoke or withdraw specific licenses authorizing
the operation of blocked accounts which were issued prior to January 19, 1981, and
which do not relate to litigation. Such licenses are revoked as of April 15,
1981, unless extended by further general or specific license.

17

9.

Section 535.219 is added as follows:

Section 535.219

Discharge of obligation by compliance with this part.

Compliance with sections 535.210, 535.211, 535.212, 535.213, 535.214
and 535.215, or any other orders, regulations, instructions or directions issued
pursuant to this part licensing, authorizing, directing or compelling the transfer
of the assets described in those sections, shall, to the extent thereof, be a
full acquittance and discharge for all purposes of the obligation of the person
making the same. No person shall be held liable in any court for or with respect
to anything done or omitted in good faith in connection with the administration of,
or pursuant to and in reliance on, such orders, regulations, instructions or
directions.
10. Section 535.220 is added as follows:
Section 535.220

Timing of transfers required by section 535.212.

Transfers required by section 535.212 to the account of the Federal
Reserve Bank of New York, as fiscal agent of the U.S., at the Bank of England
shall be executed no later than 6 a.m., e.s.t., January 20, 1981, when the bank­
ing institution had knowledge of the terms of Executive Order 12278 of January 19,
1981.
11. Section 535.221 is added as follows:
Section 535.221

Compliance with directive provisions.

(a) Compliance with the directive provisions of sections 535.213 and
535.214 requires that persons affected by these sections shall implement the
directives as soon as reasonably practicable.
(b) Until the Secretary of the Treasury determines that the authority of
the United States to order these transfers has been the subject of a definitive
legal ruling, the United States Government will not seek to impose civil or
criminal sanctions on any party who does not make the transfers required by
sections 535.213, 535.214 and 535.215 and Executive Orders 12279-81 of January 19,
1981.
(c) Transfers of deposits or funds required by Sections 535.213 and 535.214
of this part shall be effected by means of wire transfer to the Federal Reserve Bank
of New York for credit to the following account: Federal Reserve Bank of New York,
as fiscal agent of the United States, Special DepositAccount.
(d) Securities to be transferred as required by Sections 535.213and 535.214
of this part must be delivered to the Federal ReserveBank of New York in
fully
transferable form, accompanied by all necessary transfer documentation, e.g..
stock or bond powers, powers of attorney, and also accompanied by instructions
to deposit such securities to the following account: Federal Reserve Bank of
New York, as fiscal agent of the United States, Special Custody Account.

18

(i)
Securities which are in book-entry form shall be
transferred by wire transfer to the Federal Reserve Bank of
New York for credit to the account named in paragraph (d)
above.
(ii) Definitive securities which are in bearer or
registered form shall be hand delivered or forwarded by
registered mail, insured, to the Federal Reserve Bank of
New York, Safekeeping Department.
(e) If a security in which Iran or an Iranian entity has an interest is
evidenced by a depositary receipt or other evidence of a security, the legal
owner of such security shall arrange to have it placed in registered form in
the name of Iran or the Iranian entity having an interest in such security, as
appropriate, and transferred pursuant to paragraph d(ii) above.
(f) Securities in which Iran or an Iranian entity has an interest that are
held in the name of a nominee must be re-registered in the name of Iran or the
Iranian entity having an interest in such security, as appropriate, and transferred
pursuant to paragraph d(ii) above.
(g) Any person delivering a security or securities to the Federal Reserve Bank
of New York under paragraph (d) shall provide the Bank at least two business days
prior written notice of such delivery, specifically identifying the sending person,
the face or par amount and type of security, and whether the security is in bearer,
registered or book entry form.
12.

Section 535.222 is added as follows:
Section 535.222

Suspension of claims eligible for Claims Tribunal.

(a) All claims which may be presented to the Iran-United States Claims
Tribunal under the terms of Article II of the Declaration of the Government of the
Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by
the Government of the United States of America and the Government of the Islamic
Republic of Iran, dated January 19, 1981, and all claims for equitable or other
judicial relief in connection with such claims, are hereby suspended, except as
they may be presented to the Tribunal. During the period of this suspension, all
such claims shall have no legal effect in any action now pending in any court in
the United States, including the courts of any state and any locality thereof, the
District of Columbia and Puerto Rico, or in any action commenced in any such court
after the effective date of this section.
(b) Nothing in paragraph (a) above shall prohibit the assertion of a defense,
set-off or counterclaim in any pending or subsequent judicial proceeding commenced
by the Government of Iran, any political subdivision of Iran, or any agency, instru­
mentality or entity controlled by the Government of Iran or any political subdivision
thereof.
(c) Nothing in this section precludes the commencement of an action after
the effective date of this section for the purpose of tolling the period of limita­
tions for commencement of such action.

19

(d) Nothing in this section shall require dismissal of any action for
want of prosecution.
(e) Suspension under this section of a claim or a portion thereof submitted
to the Iran-United States Claims Tribunal for adjudication shall terminate upon a
determination by the Tribunal that it does not have jurisdiction over such claim
or portion thereof.
(f) A determination by the Iran-United States Claims Tribunal on the merits
that a claimant is not entitled to recover on a claim or part thereof shall operate
as a final resolution and discharge of such claim or part thereof for all purposes.
A determination by the Tribunal that a claimant shall have recovery on a claim or
part thereof in a specified amount shall operate as a final resolution and discharge
of such claim or part thereof for all purposes upon payment to the claimant of the
full amount of the award including any interest awarded by the Tribunal.
(g) Nothing in this section shall apply to any claim concerning the validity
or payment of a standby letter of credit, performance or payment bond or other
similar instrument.
(h)

The effective date of this section is February 24, 1981.

13. Section 535.333 is added as follows:
Section 535.333

Properties.

(a) The term "properties" as used in section 535.215 includes all uncon­
tested and non-contingent liabilities and property interests of the Government
of Iran, its agencies, instrumentalities or controlled entities, including debts.
It does not include bank deposits of funds and securities. It also does not
include obligations under standby letters of credit or similar instruments in
the nature of performance bonds, including accounts established pursuant to
section 535.568.
(b) Properties are not Iranian properties or owned by Iran unless all
necessary obligations, charges and fees relating to such properties are paid
and liens against such properties (not including attachments, injunctions and
similar orders) are discharged.
(c) Liabilities and property interests may be considered contested if the
holder thereof reasonably believes that a court would not require the holder,
under applicable law to transfer the asset by virtue of the existence of a defense,
counterclaim, set-off or similar reason. For purposes of this paragraph, the term
"holder" shall include any person who possesses the property, or who, although
not in physical possession of the property, has, by contract or otherwise, control
over a third party who does in fact have physical possession of the property. A
person is not a "holder" by virtue of being the beneficiary of an attachment,
injunction or similar order.
(d) Liabilities and property interests shall not be deemed to be contested
solely because they are subject to an attachment, injunction or other similar order.

20

14. Section 535.334 Is added as follows:

Section 535.334

Act of the Government of Iran.

For purposes of section 535.216* an act of the Government of Iran,
Includes any acts ordered, authorized, allowed, approved, or ratified by the
Government of Iran, Its agencies, Instrumentalities or controlled entitles.
15. Section 535.335 Is added as follows:
Section 535.335

Claim arising out of events In Iran.

For purposes of section 535.216, a claim is one "arising out of events"
of the type specified only if such event is the specific act that is the basis of
the claim.
16. Section 535.337 is added as follows:
Section 535.337

Funds.

For purposes of this part, the term "funds" shall mean monies in trust,
escrow and similar special funds held by non-banking institutions, currency and
coins. It does not include accounts created under section 535.568.
17. Section 535.433 is added as follows:
Section 535.433

Central Bank of Iran.

The Central Bank of Iran (Bank Markazi Iran) is an agency, instrumentality
and controlled entity of the Government of Iran for all purposes under this part.
18. Section 535.437 is added as follows:
Section 535.437

Effect on other authorities.

Nothing in this part in any way relieves any persons subject to the juris­
diction of the United States from securing licenses or other authorizations as required
from the Secretary of State, the Secretary of Commerce or other relevant agency prior
to executing the transactions authorized or directed by this part. This includes
licenses for transactions involving military equipment.
19. Section 535.438 is added as follows:
Section 535.438

Standby letters of credit, performance or pc.yment bonds
and similar obligations.

Nothing contained in sections 535.212, 535.213 and 535.214 or in any other
provision or revocation or amendment of any provision in this part affects the prohibi­
tion in section 535.201 and the licensing procedure in section 535.568 relating to
certain standby letters of credit, performance bonds and similar obligations. The
term "funds and securities" as used in this part does not include substitute blocked
accounts established under section 535.568 relating to standby letters of credit,
performance or payment bonds and similar obligations.

21

20. Section 535.440

Commercially reasonable interest rates.

For purposes of sections 535.212 and 535.213, what is meant by "commercially
reasonable rates'* depends on the particular circumstances of the deposit. Where, for
example, a deposit has in fact operated as a demand account under Treasury license,
it would be appropriate to treat the deposit for purposes of sections 535.212 and
535.213 as a non-interest-bearing account.
21. Section 535.504 is amended to read as follows:
Section 535.504

Certain judicial proceedings with respect to property
of Iran or Iranian entities.

(a) Subject to the limitations of paragraphs (b) and (c) of this section and
section 535.222, judicial proceedings are authorized with respect to property in which
on or after 8:10 a.m., e.s.t., November 14, 1979, there has existed an interest of
Iran or an Iranian entity.
Cb)

This section does not authorize or license:

Cl) Any pre-judgment attachment or any other proceeding of similar or
analogous effect pertaining to any property (and any income earned thereon) subject
to the provisions of sections 535.211, 535.212, 535.213, 535.214 and 535.215 on
January 19, 1981, including, but not limited to, a temporary restraining order or
preliminary Injunction, which operates as a restraint on property, for purposes of
holding It within the jurisdiction of a court, or otherwise;
(2)
Any payment or delivery out of a blocked account based upon a
judicial proceeding, pertaining to any property subject to the provisions of
sections 535.211, 535.212, 535.213, 535.214 and 535.215 on January 19, 1981;
(c)
A judicial proceeding is not authorized by this section if it is based
on transactions which violated the prohibitions of this part.
22. Section 535.579 is added as follows:
Section 535.579

Authorization of new transactions concerning certain
Iranian property.

(a) Transactions involving property in which Iran or an Iranian entity has an
interest are authorized where:
Cl) the property comes within the jurisdiction of the United States or
Into the control or possession of any person subject to the jurisdiction of the
United States after January 19, 1981, or
C2) the interest in the property of Iran or an Iranian entity Ce.g.
exports consigned to Iran or an Iranian entity) arises after January 19, 1981.
Cb) Transactions involving standby letters of credit, performance or payment
bonds and similar obligations, entered into prior to January 20, 1981, described in
section 535.568 remain subject to the prohibitions and procedures contained in
sections 535.201 and 535.568.

22

(c)
Property not blocked under section 535.201 as of January 19, 1981, In
which the Government of Iran or an Iranian entity has an interest, which after
that date is or becomes subject to the jurisdiction of the United States or comes
within the control or possession of a person subject to the jurisdiction of the
United States for the express purpose of settling claims against Iran or Iranian
entities, is excluded from any authorization in this part for any attachment,
Injunction or other order of similar or analogous effect and any such attachment,
injunction or order is prohibited by sections 535.201 and 535.203.
23. Section 535.618

Report of contested property.

(a) Requirement for reports. Reports are required to be filed within 15
days of receipt of a direction from Iran to transfer any interests in property claimed
or believed to be an interest of Iran which was blocked by the Iranian Assets Control
Regulations if the party receiving the direction to transfer has not transferred such
claimed interest in property.
Cb) Who must report. Reports must be filed by every person subject to the
jurisdiction of the United States who does not transfer any interest or claimed interest
in property described in paragraph C&) of this section within 15 days of a direction
from Iran to transfer it.
Cc) Contents of report. Each report shall contain the following information.

Cl)
C2)
C3)
(A)
C5)
C6)
C7)

Name and address of entity making the report.
Name of person and entity directing the transfer.
Date of the direction and date of its receipt.
Description of the interest or claimed interest in property
directed to be transferred.
Statement or estimate of value of the interest or claimed
interest in property.
Explanation why property was not transferred as directed.
Statement of any planned actions with respect to the interest
or claimed interest in the property described.

Cd) Filing. Reports shall be prepared in triplicate. Two copies
shall be
sent in a set to Unit 617, Office of Foreign Assets Control,
Departmentof the Treasury,
Washington, D.C. 20220. The third copy must be retained with the reporter's records.
(e)
Confidentiality of reports. Reports under this section are regarded as
privileged and confidential.
24. Section 535.902 is amended to read as follows:
Section 535.902

Set-offs by U.S. owned or controlled firms abroad.
*

*

*

*

*

*

Cb) The general license in paragraph (a) of this section is revoked as of
January 19, 1981.
Cc) For purposes of this section, set-offs include combinations of accounts
and any similar actions.

23

25. Fart 535 Is amended by the revocation of sections 535.204, 535.206, 535.207,
535.209, 535.331, 535.332, 535.418, 535.419, 535.422, 535.423, 535.424, 535.425,
535.426, 535.427, 535.428, 535.429, 535.430, 535.431, 535.432, 535.550, 535.562,
535.563, 535.572, 535.574, 535.575, 535.577, 535.578, and 535.603.
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section
Section

535.204 [Revoked]
535.206-207 [Revoked]
535.209 [Revoked]
535.331 [Revoked]
535.332 [Revoked]
535.418 [Revoked]
535.419 [Revoked]
535.422-432 [Revoked]
535.550 [Revoked]
535.562 [Revoked]
535.563 [Revoked]
535.572 [Revoked]
535.574 [Revoked]
535.575 [Revoked]
535.577 [Revoked]
535.578 [Revoked]
535.603 [Revoked]

Dated:

Dennis M. O'Connell
Director

Approved:
John P. Simpson
Acting Assistant Secretary
(Enforcement & Operations)

]_Authority:
E.O.
E.O.
E.O.
E.O.
E.O.

No.
No.
No.
No.
No.

Sec. 201-207, 91 Stat. 1626, 50 U.S.C. 1701-1706;
12170, 44 FR
12211, 45 FR
12279, 46 FR
12281, 46 FR
12283, 46 FR
.7

Filed:
Publication date:
24


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102