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federal reserve

Ba n k

DALLAS, TEXAS

of

Dallas

75222

Circular No. 81-124
June 22, 1981

IRANIAN ASSETS CONTROL REGULATIONS
Amendments

TO ALL MEMBER BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Office of Foreign Assets Control is amending the Iranian Assets
Control Regulations. The purposes of the amendments are outlined in detail in
the text of the Federal Register document printed on the following pages. The
effective date of the amendments was June 4, 1981.
Questions regarding the amendments should be directed to Raymond
W. Konan, Chief Counsel, Office of Foreign Assets Control, Department of the
Treasury, Washington, D.C. 20220, Tel. (202) 376-0236.
Sincerely yours,

First Vice President

Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

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

30340

Federal Register / Vol. 46, No. 109 / Monday, June 8, 1981 / Rulea and Regulations
authorize or compel any payment or
transfer of any obligation under a
standby letter of credit, performance
bond, or similar obligation as to which a
blocked account has been established
pursuant to § 535.568 or as to which
payment is prohibited under an
injunction obtained by the account
party; and (5) to require that persons
making the required transfers of
financial assets of Iran to the Federal
Reserve Bank of New York promptly
report on those transfers to the Office of
Foreign Assets Control.
The amendments are needed to
facilitate the ongoing implementation of
the Iran-U.S. agreements of January 19,
1981, providing for the release of the
hostages detained in Iran and the
transfer of Iranian property blocked by
the United States. See further discussion
under “Supplementary Information”.
EFFECTIVE DATE: June 4,1981.
FOR FURTHER INFORMATION CONTACT:

DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 535
Iranian Assets Control Regulations:
Transfer of Financial Assets to Federal
Reserve Bank of New York
AGENCY:

Office of Foreign Assets

Control.
ACTION:

Final rule.

The Office of Foreign Assets
Control is amending the Iranian Assets
Control Regulations. The purposes of the
amendments are: (1) to direct banks and
other persons holding Iranian financial
assets to transfer them to the Federal
Reserve Bank of New York on or before
noon, E.D.T., June 19,1981; (2) to revoke
the policy of not seeking to impose
criminal and civil sanctions on holders
of Iranian property who do not comply
with the transfer requirements of the
Iranian Assets Control Regulations; (3)
to provide additional guidance on the
meaning of the term “commercially
reasonable” rates of interest; (4) to make
clear that no transfer requirement under
I 535.213 or § 535.214 shall be deemed to
SUMMARY:

Raymond W. Konan, Chief Counsel,
Office of Foreign Assets Control,
Department of the Treasury,
Washington, D.C. 20220, Tel. (202) 376­
0236.
SUPPLEMENTARY INFORMATION: In a
recent decision, Chas. T. Main
International, Inc. v. Khuzestan W ater &
Power Authority, No. 80-1027 (1st Cir.,
May 22,1981), the United States Court of
Appeals for the First Circuit held that
the President has authority to order the
transfer of blocked Iranian assets
without regard to attachments or other
judicial orders obtained subsequent to
the November 14,1979, blocking order,
and that he has the authority to settle
claims of U.S. parties against Iranian
entities by providing for their
submission to binding arbitration.
Similarly, the United States Court of
Appeals for the District of Columbia
Circuit, in American International
Group v. Islamic Republic o f Iran, No.
80-1779 (D.C. Cir., May 22,1981),
reviewed the Executive Orders
nullifying attachments and suspending
claims in implementation of the January
19,1981, agreements, and rendered a
judgment that the suspension of claims
“is a lawful exercise of the President’s
power to arrange for the settlement of
claims of American nationals against
the governments of foreign states,” and
directed that attachments and other
provisional remedies be vacated. These
decisions confirm the legal judgments
reached by the present Attorney
General of the United States, and his
predecessor, upholding the President’s
authority to order the prompt transfer of
property in which Iran has an interest.
Further, they provide the basis for

Federal Register / Vol. 46, No. 109 / Monday, June 8, 1981 / Rules and Regulations_____ 30341
revocation of the policy established by
the prior regulations against the seeking
of civil and criminal sanctions against
persons who hold or control Iranian
property required to be transferred.
Section 203(a)(3) of the International
Emergency Economic Powers Act (50
U.S.C. 1702(a)(3)), Section 1-103 of
Executive Order 12279, Section 1-103 of
Executive Order 12280, Section 1-103 of
Executive Order 12281 and Section
535.219 of the Iranian Assets Control
Regulations provide that compliance
with the transfer directives of the
Iranian Assets Control Regulations
shall, to the extent thereof, be a full
acquittance and discharge for all
purposes of the obligations of the person
so complying and further provide that no
person shall be liable in any United
States court for anything done or
omitted in good faith compliance
therewith.
Since the Regulations involve a
foreign affairs function, 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.
31 CFR Part 535 is amended as
follows:
1. Section 535.213 is amended by the
revocation and removal of paragraph
(b), by adding a new paragraph (b) in its
place, and by adding paragraph (d) as
follows:
§ 535.213 [Amended]
*

*

*

*

*

(b) Transfers of funds, securities or
deposits under paragraph (a) of this
section shall be in accordance with the
provisions of § 535.221 of this part, and
such funds, securities or deposits, plus
interest at commercially reasonable
rates from November 14,1979, to the
transfer date, shall be received by the
Federal Reserve Bank of New York on
or before noon, E.D.T., June 19,1981. For
periods for which rates are to be
determined in the future, whether by
agreement between Iran and the bank or
otherwise (see § 535.440), interest for
such periods shall be transferred to the
Federal Reserve Bank of New York
promptly upon such determination.
Persons in possession or control of
property required to be transferred by
this section shall take all actions they
believe necessary to effect the required
transfers.
*

*

*

*

*

(d) The transfers of securities required
by this section shall be made
notwithstanding § 535.202.
2. Section 535.214 is amended by the
revocation and removal of paragraph

(b), by adding a new paragraph (b) in its
place, and by adding paragraph (d) as
follows:
§535.214 [Amended]
•

*

*

*

*

(b) Transfers of funds and securities
under paragraph (a) of this section shall
be in accordance with the provisions of
§ 535.221 of this part, and such funds
and securities shall be received by the
Federal Reserve Bank of New York on
or before noon, E.D.T., June 19,1981.
Persons in possession or control of
property required to be transferred by
this section shall take all actions they
believe necessary to effect the required
transfers.
*

*

*

*

*

(d) The transfers of securities required
by this section shall be made
notwithstanding § 535.202.
3. Section 535.221 is amended by the
revocation and removal of paragraphs
(a), (b) and (f), by the revision of
paragraphs (c) and (d) and by the
redesignation of paragraphs. As revised,
§ 535.221 reads as follows:
S 535.221 Compliance with directive
provisions.

(a) Transfers of deposits or funds
required by §§ 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 accounts: with respect to
transfers required by § 535.213, to the
Federal Reserve Bank of New York, as
fiscal agent of the United States, Special
Deposit Account A, and with respect to
transfers required by § 535.214, to the
Federal Reserve Bank of New York, as
fiscal agent of the United States, Special
Deposit Account B.
(b) Securities to be transferred as
required by § § 535.213 and 535.214 of
this part that are not presently
registered in the name of Iran or an
Iranian entity shall be delivered to the
Federal Reserve Bank of New York in
fully transferable form (bearer or
endorsed in blank), accompanied by all
necessary transfer documentation, e.g.,
stock or bond powers or powers of
attorney. All securities transferred,
including those presently registered in
the name of Iran or an Iranian entity,
shall be accompanied by instructions to
deposit such securities to the following
accounts: with respect to transfers
required by § 535.213, to the Federal
Reserve Bank of New York, as fiscal
agent of the United States, Special
Custody Account A, and with respect to
transfers required by § 535.214, to the
Federal Reserve Bank of New York, as
fiscal agent of the United States, Special
Custody Account B.

(1) Securities which are in book-entry
form shall be transferred by wire
transfer to the Federal Reserve Bank of
New York to the appropriate account
named in this paragraph.
(2) 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, to the appropriate account
named in this paragraph.
(c) 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 the security placed in fully
transferable form (bearer or endorsed in
blank) as provided in paragraph (b) of
this section, and transferred pursuant to
paragraph (b)(2) of this section.
(d) Any person delivering a security or
securities to the Federal Reserve Bank
of New York under paragraph (b) shall
provide the Bank at least 2 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 bookentry form.
4. Section 535.337 is revised to read as
follows:
§535.337

Funds.

For purposes of this part, the term
“funds” shall mean monies in trust,
escrow accounts and similar special
funds, money market funds, cash
balances held by a broker/dealer,
currency and coins. It does not include
accounts created under § 535.568.
5. Section 535.438 is amended by
redesignating the existing text as
paragraph (a) and by adding a new
paragraph (b) as follows:
§535.438 [Amended]
*

*

*

*

*

(b) No transfer requirement under § §
535.213 or 535.214 shall be deemed to
authorize or compel any payment or
transfer of any obligation under a
standby letter of credit, performance
bond or similar obligation as to which a
blocked account has been established
pursuant to § 535.568 or as to which
payment is prohibited under an
injunction obtained by the account
party.
6. Section 535.440 is revised to read as
follows:
§ 535.440 Commercially reasonable
interest rates.

For purposes of §§ 535.212 and
535.213, what is meant by “commercially

30342

Federal Register / Vol. 46, No. 109 / Monday, June 8, 1981 / Rules and Regulations

reasonable rates” depends on the
particular circumstances. In the case of
time or savings deposits, the
“commercially reasonable rate” is that
rate provided for by the deposit
agreement or applicable law. With
respect to other obligations where the
rate remains to be determined, it is
presently expected that the
“commercially reasonable rate” will be
the rate agreed upon by the bank and
Iran. However, where a deposit has in
fact operated as a demand account
under Treasury license, it would be
appropriate to treat the deposit for
purposes of §5 535.212 and 535.213 as a
non-interest-bearing account.
7. New S 535-620 is added as follows:
S 535.620 Report of transfer of domestic
bank assets and financial assets held by
nonbanking Institutions.

(a) Requirement for reports. A report
shall be filed on Form TFR-620 by any
bank or nonbanking institution
regarding any transfer to the Federal
Reserve Bank of New York under
SS 535.213 and 535.214 within 5 business
days of such transfer.
(b) Contents o f report. Each report
shall contain the following information:
(1) Name and address of the
transferor (indicate whether bank or
nonbanking institution).
(2) Name and telephone number of
person to be contacted about the
transfer.
(3) Description of the property
transferred with a list of accounts
transferred, including account party,
account number, and account amount,
with breakdown between principal and
interest.
(4) Total value (market value in the
case of securities) of each transfer.
(5) Date and time of transfer.
(6) A statement as to how interest was
calculated, including rate(s) of interest
and period(s) for which the rate(s) was
applied.
(c) Filing. Reports shall be prepared in
triplicate. Two copies shall be sent in a
set to Unit 620, Office of Foreign Assets
Control, Department of the Treasury,
Washington, D.C. 20220. Hie third copy
shall be retained for the reporter’s
records.
(d) Confidentiality o f reports. Reports
under this section are regarded as
privileged and confidential but may be
disclosed to Iran.
(Secs. 201-207, 91 Stat. 1026, SOU.S.C. 1701­
1706; E.O. No. 12170,44 FR 65729; E.O. No.
12205, 45 FR 24009; E.O. No. 12211,45 FR
26605; E.O. No. 12276,46 FR 7913; EO. No

12279,46 FR 7919; E.O. No. 1228a 46 FR 7921:
E.O. No. 12281,46 FR 7923; E.O. No. 12282.46
FR 7925; and E.O. No. 12294,46 FR 14111)
Dated: June 4,1981.
Dennis M. O’Connell,
Director.
Approved:
John P. Simpson,
Acting Assistant Secretary, Enforcement and
Operations.
[FR Doc. 81-17022 Filed 6-4-81:3.-47 pm]
BILLING CODE 4S10-2S-M

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