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F ederal

reserve b a n k of

DALLAS. TEXAS

D allas

75222

Circular No. 82-41
April 7, 1982

IRANIAN ASSETS CONTROL REGULATIONS

Final Rule

TO ALL MEMBER BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Office of Foreign Assets Control is amending the Iranian
Assets Control Regulations. The purpose of the amendment is outlined in
the material submitted for publication in the Federal Register printed
on the following pages. The effective date of the amendment is March 19,
1982.
Questions regarding the amendment should be directed to
Raymond W. Konan, Chief Counsel, Office of Foreign Assets Control,
Department of the Treasury, Washington, D.C.
20220, Telephone (202)
376-0236.
Additional copies of this circular will be furnished upon
request to the Department of Communications, Financial and Community
Affairs, Ext. 6289.
Sincerely yours,

William H. Wallace
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)

IN ADVANCE OF PRINTED COPY
AM M
END ENT
DEPARTM
ENT O THE TREASURY
F
OFFICE OF FOREIGN ASSETS CONTROL
31 CFR PART 535
Irani an Assets Control Regulations: Time to E s t ab l i sh
Blocked Accounts in Lieu of Payments under Standby
L e t t er s of Credit
AGENCY:

Office of Foreign Assets Control

ACTION:

Final Rule

SUM ARY: The Office of Foreign Assets Control is amending §535.568 of
M
the Irani an Assets Control Re gula t ions. The purposes of t h i s amendment
are:
(1) to e s t a b l i s h procedures f or the est abl ishment of a blocked
account by the account p ar t y to a standby l e t t e r of c r e d i t in cases where
a demand for payment is out st andi ng and payment was barred by a court
i nj u n ct i on which i s removed; (2) to provide t h a t the account p ar ty may
apply for a s p e c i f i c l i c e n s e providing an extension of time to e s t a b l i s h
a blocked account where a demand for payment has been made and the account
p ar t y has f i l e d a p e t i t i o n in an a p p r o p r i a t e cour t for a j u d i c i a l order
bar ri ng payment of a standby l e t t e r of c r e d i t .
EFFECTIVE DATE:

March 19, 1982.

FO FURTHER INFORM
R
ATION CONTACT: Raymond W Konan, Chief Counsel,
.
Office of Foreign Assets Control, Department of the Treasury, Washington,
D.C. 20220, Tel. (202) 376-0236.
SUPPLEM
ENTARY INFORMATION: Since the Regulations involve a f or ei gn
a f f a i r s f u n c t i o n , the pr ovi si ons of the Admi ni st rat i ve Procedure Act,
5 U.S.C. 553, r e q u i r i n g no t i ce of proposed rulemaking, o p p or t uni t y for
public p a r t i c i p a t i o n and delay in e f f e c t i v e d a t e , are i n a p p l i c a b l e . Simi­
l a r l y , because the Regulations are issued with r e s p e c t to a f or ei gn a f f a i r s
funct i on of the United S t a t e s , t hey are not s ub j e c t to Executive Order
12291 of February 17, 1981, deal i ng with Federal r e g u l a t i o n s .
Section 535.568 is amended by the a d d i t i o n of a new paragraph
( c) , t he a p p r o p r i a t e r e l e t t e r i n g of subsequent paragraphs, the a d d i t i o n of
ap p r o p r i a t e r e f er en ce s to new paragraph ( c ), and the r e v i s i o n of former
par agra ph_(h). _§535.568 Certain Standby L e t t e r s of Credi t and Performance
Bonds, /amended/
(a)
Notwithstanding any ot her pr ovi si on of law, payment i n t o a
blocked account in a domestic bark by an i s s ui n g or confirming bank under
a standby l e t t e r of c r e d i t in favor of an Irani an e n t i t y is p r oh i b i t e d by
§535.201 and not a u t h o r i z e d , notwithst andi ng the provi si ons of §535.508,
i f e i t h e r (1) a s p e c i f i c l i c e n s e has been issued pursuant to the provi si ons
of paragraph (b) hereof or (2) e i g h t business days have not expired a f t e r
n o t ice to the account par t y pursuant to paragraph (b) hereof.

-2 -

(b) Whenever an i ss ui ng or confirming bank sha l l r e c e i ve such
demand for payment under a standby l e t t e r of c r e d i t , i t shal l promptly
n o t i f y the person for whose account the c r e d i t was opened. Such person
may then apply within f i ve business days f o r a s p e c i f i c l i c e n s e a u t h o r i z ­
ing the account p ar t y to e s t a b l i s h a blocked account on i t s books in the
name of the Iranian e n t i t y in the amount payable under the c r e d i t , in
l i e u of payment by the i ss ui ng or confirming bank i n t o a blocked account
and reimbursement t h e r e f o r by the account p a r ty .
(c) Where t h e r e is out st andi ng a demand for payment under a
standby l e t t e r of c r e d i t , and t he i ss u i ng or confirming bank has been
enjoined from making payment, upon removal of the i n j u n c t i o n , the person
f or whose account the c r e d i t was opened may apply for a s p e c i f i c l i c e n s e
f or the same purpose and in the same manner as t h a t s e t f o r t h in paragraph
(b) of t h i s s e c t i o n . The i ss ui ng or confirming bank shall not make payment
under the standby l e t t e r of c r e d i t unless (1) e i g h t business days have
expired si nce the bank has recei ved n o ti ce of the removal of t he i nj u n c t i o n
and (2) a s p e c i f i c l i c e n s e issued to the account part y pursuant to the
provi si ons of t h i s paragraph has not been presented to the bank.
(d) I f necessary to as sur e the a v a i l a b i l i t y of t he funds blocked,
the S ecr et ary may a t any time r eq ui re the payment of the amounts due under
any l e t t e r of c r e d i t described in paragraph (a) i n t o a blocked account in
a domestic bank or the supplying of any form of s e c u r i t y deemed neces sar y.
(e) Nothing in t h i s s e c t i on precludes any person for whose
account a standby l e t t e r of c r e d i t was opened or any ot her person from a t
any time c o n t e s t i n g the l e g a l i t y of t he demand from the Iranian e n t i t y or
from r a i s i n g any ot her l egal defense to payment under the standby l e t t e r
of c r e d i t .
( f) This se ct i on does not a f f e c t the o b l i g a t i o n of the various
p a r t i e s of t he i nstruments covered by t h i s s e c t i o n i f the instruments and
payment thereunder are subsequently unblocked.
(g) For the purposes of t h i s s e c t i o n , the term "standby l e t t e r
of c r e d i t " sh a l l mean a l e t t e r of c r e d i t securi ng performance o f , or
repayment of , any advance payments of d e p o s i t s , under a c o n t r a c t with Iran
or an Irani an e n t i t y , or any s i m i l a r o b l i g a t i o n in the nat ure of a p e r f o r ­
mance bond.
(h)The r e g u l a t i o n s do not a u t h o r i z e any person s u b j e c t to the
j u r i s d i c t i o n of the United S tat es to reimburse a non-U.S. bank for payment
to Iran or an I rani an e n t i t y under a standby l e t t e r of c r e d i t , except by
payment i n t o a blocked account in accordance with §535.508 or paragraph
(b) or (c) of t h i s s e c t i o n .
(i)
A person r e c e i vi ng a s p e c i f i c l i c e n s e under paragraph (b) or
(c) of t h i s s e c t i on sh a l l c e r t i f y to the Office o f Foreign Assets Control
within f i ve business days a f t e r r e c e i p t of t h a t l i c e n s e t h a t i t has e s t a b ­
l i s h e d the blocked account on i t s books as provided for in those paragraphs
However, in a p p r o p r i a t e ca s es , t h i s time may be extended upon a p p l i c a t i o n
to the Office of Foreign Assets Control when the account p ar t y has f i l e d a
p e t i t i o n with an a p p r o p r i a t e court seeking a j u d i c i a l order bar ri ng payment
by the i ss u i n g or confirming bank.

-3-

( j ) The ext ensi on or renewal of a standby l e t t e r o f c r e d i t is
a u t ho r iz e d .

( signed) Dennis M. O'Connell
Dennis M O'Connell
.
Di re ct or
Office o f Foreign Assets Control
Approved:

(signed) John M Walker, J r .
.
John M. Walker, J r .
A s s i s t a n t Secr et ary
(Enforcement and Operations)

Publ i ca t i on d a t e:

March 23, 1982

F i l i n g Date:

March 19, 1982

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