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federal reserve

Bank

DALLAS, TEXAS

of

Dallas

75222

C ircu lar No. 79-190
November 28, 1979

IRANIAN ASSETS CONTROL REGULATIONS

TO ALL BANKS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:

Enclosed a r e amendments adding Sections 5 3 5 .4 1 4 and 5 3 5 .5 0 4
to the T r e a s u ry Departm ent's Iranian A ssets Control Regulations.
Also included is the attachment containing the text of the regulations
announced in o u r C ircu lar No. 79-187, dated November 26, 1979.

Sincerely y o u r s ,
Robert H. Boykin
F irs t Vice P resident
Enclosures (2)

B a n ks and o th e rs are e n c o u ra g e d to use th e fo llo w in g in c o m in g W A TS n u m b e rs in c o n ta c tin g th is Bank:
1-800-442-7140 (in tra s ta te ) and 1-800-527-9200 (in te rs ta te ). F or c a lls p la c e d lo c a lly , p le a se use 651 p lu s th e
e x te n s io n re fe rre d 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

Title 31 - MONEY AND FINANCE:
Treasury
Chapter V - Foreign Assets Control
Department of the Treasury
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 purpose of the first amendment is to
add new §535.414 interpreting §535.508, which concerns payments into
blocked accounts.
The purpose of the second amendment is to add new
§535.504 authorizing certain judicial proceedings with respect to blocked
accounts, up to but not including entry of judgment.
The purpose of the
third amendment is to add a new interpretation stating that payments
received under §535.508 may be distributed to others.
The need for the
first amendment is to make clear that §535.508 only permits payments
into blocked accounts held by U. S. domestic banks.
The need for the
second amendment is to authorize judicial proceedings to deal with a
large volume of cases which are anticipated, and which will meet the
terms of the new section.
The need for the third amendment is to make
clear that §535.904 was originally intended to allow distribution of
the payments authorized under that section.
The effect of the amendments
is that the limitations on the scope of the general authorization in
§535.508 will be clear, all cases falling within the conditions in
§535.504 will be licensed without individual license applications in
each case and the meaning of §535.904 will be clarified.
EFFECTIVE DATE:

November 23, 1979

FOR FURTHER INFORMATION CONTACT:
Dennis M. O'Connell
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 function, the provisions of the Administrative Procedure Act,
5 U.S.C. 553, requiring notice of proposed rulemaking, the opportunity
for public participation and a delay in effective date are inapplicable.
31 CFR, Part 535 is amended by the addition of §§535.414, 535.415 and
535.504 as follows:
*

*

*

*

*

-2 -

5535.414

Payments to blocked accounts under §535.508.

(a)
Section 535.508 does not authorize any transfer from a
blocked account within the United States to an account held by any
b a n k outside the United States or any other payment into a blocked
account outside the United States.
(b)
Section 535.508 only authorizes payment into a blocked
account held by a domestic bank as defined by §535.320.
*

*

*

*

*

§535.415
Payment by Iranian Entities of Obligations to Persons
within the United States
A person receiving payment under section 535.904 of this part
may distribute all or part of that payment to anyone, provided
that any such payment to Iran or an Iranian entity must be to a
blocked account in a domestic bank.
§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, judicial proceedings are authorized with respect to property
in which on or since the effective date there has existed an interest
of Iran or an Iranian entity.
(b)

This section does not authorize or license:

(1)
The entry of any judgment or of any decree or order of
similar or analogous effect upon any judgment book, minute book, journal
or otherwise, or the docketing of any judgment in any docket
book, or
the filing of any judgment roll or the taking of any other similar or
analogous action.
(2) Any payment or delivery out of a blocked account based
upon a judicial proceeding, nor does it authorize the enforcement or
carrying out of any judgment or decree or order of similar or analogous
effect with regard to any property in which Iran or an Iranian entity has
an interest.
(c) A judicial proceeding is not authorized by this section if it is
based on transactions which violated the prohibitions of this part.
Dated:

November 23,

1979

Is/ Stanley L. Sommerfield
Stanley L. Sommerfield
Director
Office of Foreign Assets Control
Approved:

/s/ Richard J. Davis
Richard J. Davis
Assistant Secretary

DEPARTMENT OF THE TREASURY
Title 31 — Money and Finance: Treasury
CHAPTER V — FOREIGN ASSETS CONTROL
PART 535 — IRANIAN ASSETS CONTROL REGULATIONS
AGENCY: Office of Foreign Assets Control.

The Iranian Assets Control Regulations are issued
as follows:

ACTION: Final Rule.

Accordingly, 31 C F R Chapter V i amended by
s
adding a new Part 535 to read as follows:

SUMMARY: The Office of Foreign Assets Control
i issuing the Iranian Assets Control Regulations. The
s
purpose of the Regulations i to block assets of the
s
Government of Iran or i s instrumentalities or con­
t
trolled entities. The need for the Regulations i to
s
implement the provisions of Executive Order No.
12170, and to meet the threat to the national secu­
r t , foreign policy and economy of the United States
iy
with respect to which the President declared a na­
tional emergency in the Executive Order. The effect
of the Regulations i that transactions in property sub­
s
ject to the jurisdiction of the United States or which
i in the possession or control of persons subject to
s
the jurisdiction of the United States in which Iran or
i s instrumentalities or controlled entities has or has
t
had any interest on or after the effective date of these
Regulations are prohibited in the absence of a license
from the Treasury Department. The Regulations do
not block assets of nationals of Iran unless such na­
tionals are substantially owned or controlled by the
state or Government of Iran.

P A R T 535 — I R A N I A N ASSETS C O N T R O L
REGULATIONS
Subpart A — Relation of This Part
to Other Laws and
Regulations
Sec. 535.101

Relation of this part to other laws and
regulations.
Subpart B — Prohibitions

Sec. 535.201

Transactions involving Iran; effective
date.

Sec. 535.202

Transactions with respect to securities
registered or inscribed in the name of
Iran.

Sec. 535.203

Effect of transfers violating the provi­
sions of this part.
Subpart C — General Definitions
Iran; Iranian Entity.

Sec. 535.311

EFFECTIVE DATE: 8:10 a.m. E.S.T., November

Sec. 535.301

Property; property interests.

Sec. 535.329

Person subject to the jurisdiction of the
United States.

14, 1979.

Subpart D — Reserved

FOR F U R T H E R INFORMATION CONTACT:
Dennis M. O ’
Connell
Acting Chief Counsel
Office of Foreign Assets Control
Department of the Treasury
Washington, D.C. 20220

Subpart E — Licenses
Sec. 535.531

Payment of certain checks and drafts.

Sec. 535.532

Completion of certain securities trans­
actions.
Subpart F — Reserved
Subpart G — Penalties

SUPPLEMENTARY INFORMATION:

Since the
regulations involve a foreign affairs function, the pro­
visions of the Administrative Procedure Act, 5 U.S.C.
553, requiring notice of proposed rulemaking, the op­
portunity for public participation and a delay in effec­
tive date are inapplicable.

Sec. 535.701

Penalties
Subpart H — Reserved
Subpart I — Miscellaneous Provisions

Sec. 535.901

Dollar Accounts at banks abroad.

A U T H O R IT Y : Secs. 201-207, 91 Stat. 1626; 50
U.S.C. 1701-1706; E.O. No. 12170, 44 F.R . 65729:

disposition, transportation, importation, exportation,
or withdrawal of, or the endorsement or guaranty of
signatures on or otherwise dealing in any security ( or
evidence therof) registered or inscribed in the name
of any Iranian entity is prohibited irrespective of the
fact that at any time (either prior to, on, or subse­
quent to the effective d ate) the registered or inscribed
owner thereof may have, or appears to have, assigned,
transferred or otherwise disposed of any such security.

SU BPA RT A — RE L A TIO N O F T H IS PART
T O O T H E R LA W S AND REG U LA TIO N S.
§ 535.101
regulations.

Relation of this part to other laws and

( a ) This part is independent of Parts 500, 505, 515,
520 and 530 of this chapter. Those parts do not relate
to Iran. No license or authorization contained in or
issued pursuant to such parts shall be deemed to
authorize any transaction prohibited by this part, nor
shall any license or authorization issued pursuant to
any other provision of law (except this part) be
deemed to authorize any transaction so prohibited.

§ 535.203 Effect of transfers violating the provi­
sions of this part.
( a ) Any transfer after the effective date which is in
violation of any provision of this part or of any regu­
lation, ruling, instruction, license, or other direction
or authorization thereunder and involves any property
in which Iran has or has had an interest since such
effective date is null and void and shall not be the
basis for the assertion or recognition of any interest in
or right, remedy, power or privilege with respect to
such property.

( b ) No license or authorization contained in or
issued pursuant to this part shall be deemed to author­
ize any transaction to the extent that it is prohibited
by reason of the provisions of any law or any statute
other than the International Emergency Economic
Powers Act, as amended, or any proclamation, order
or regulation other than those contained in or issued
pursuant to this part.

( b ) No transfer before the effective date shall be
the basis for the assertion or recognition of any right,
remedy, power, or privilege with respect to, or inter­
est in, any property in which Iran has or has had an
interest since the effective date unless the person with
whom such property is held or maintained had writ­
ten notice of the transfer or by any written evidence
had recognized such transfer prior to such effective
date.

SU BPA RT B — PRO H IB IT IO N S.
§ 535.201
date.

Transactions

involving

Iran;

effective

( a ) No property subject to the jurisdiction of the
United States or which is in the possession of or con­
trol of persons subject to the jurisdiction of the United
States in which on or after the effective date Iran has
any interest of any nature whatsoever may be trans­
ferred, paid, exported, withdrawn or otherwise dealt
in except as authorized;

(c ) Unless otherwise provided, an appropriate
license or other authorization issued by or pursuant to
the direction or authorization of the Secretary of the
Treasury before, during or after a transfer shall vali­
date such transfer or render it enforceable to the
same extent as it would be valid or enforceable but
for the provisions of the International Emergency
Economic Powers Act and this part and any ruling,
order, regulation, direction or instruction issued here­
under.

( b ) Any transaction for the purpose or which has
the effect of evading or avoiding any of the prohibi­
tions set forth in paragraph (a ) of this section is
hereby prohibited;
( c ) The term effective date means with respect to
Iran, 8:10 a.m., Eastern Standard time, November 14,
1979.

(d ) Transfers of property which otherwise would
be null and void, or unenforceable by virtue of the
provisions of this section shall not be deemed to be
null and void, or unenforceable pursuant to such pro­
visions, as to any person with whom such property
was held or maintained ( and as to such person only)
in cases in which such person is able to establish each
of the following:

§ 535.202 Transactions with respect to securities
registered or inscribed in the name of Iran.
Unless authorized by a license expressly referring
to this section, the acquisition, transfer ( including the
transfer on the books of any issuer or agent thereof),

2

mentality thereof or any territory, dependency,
colony, protectorate, mandate, dominion, pos­
session or place subject to the jurisdiction
thereof;

( 1 ) Such transfer did not represent a willful viola­
tion of the provisions of this part by the person
with whom such property was held or main­
tained;
(2 ) The person with whom such property was held
or maintained did not have reasonable cause to
know or suspect, in view of all the facts and
circumstances known or available to such per­
son, that such transfer required a license or
authorization by or pursuant to the provisions
of this part and was not so licensed or author­
ized or if a license or authorization did purport
to cover the transfer, that such license or
authorization had been obtained by misrepre­
sentation or the withholding of material facts
or was otherwise fraudulently obtained; and

(2 ) Any partnership, association, corporation, or
other organization substantially owned or con­
trolled by any of the foregoing;
(3 ) Any person to the extent that such person is, or
has been, or to the extent that there is reason­
able cause to believe that such person is, or
has been, since the effective date acting or pur­
porting to act directly or indirectly on behalf
of any of the foregoing;
(4 ) Any territory which on or since the date of this
order is controlled or occupied by the military,
naval or police forces or other authority of
Iran; and,

( 3 ) Promptly upon discovery that:
(i) Such transfer was in violation of the pro­
visions of this part or any regulation, ruling,
instruction, license or other direction or author­
ization thereunder, or

(5 ) Any other person or organization determined
by the Secretary of the Treasury to be included
within the provisions hereof.

(ii) Such transfer was not licensed or au­
thorized by the Secretary of the Treasury, or

(b )
A person specified in paragraph ( a ) ( 2 ) of this
section shall not be deemed to fall within the defini­
tion of Iran solely by reason of being located in, or­
ganized under the laws of, or having its principal
place of business in, Iran.

(iii) If a license did purport to cover the
transfer, such license had been obtained by
misrepresentation or the withholding of m ate­
rial facts or was otherwise fraudulently ob­
tained;
the person with whom such property was
held or maintained filed with the Treasury
Department, Washington, D.C., a report in
triplicate setting forth in full the circumstances
relating to such transfer. The filing of a report
in accordance with the provisions of this para­
graph shall not be deemed to be compliance
or evidence of compliance with subparagraphs
( d ) ( 1 ) and ( 2 ) of this section.

§535.311

(e )
Unless licensed or authorized pursuant to this
part any attachment, judgment, decree, lien, execu­
tion, garnishment, or other judicial process is null and
void with respect to any property in which on or since
the effective date there existed an interest of Iran.
SU BPA RT C — G E N E R A L D E FIN IT IO N S.
§ 535.301

Iran; Iranian Entity.

(a ) The term “Iran” and “Iranian Entity” includes:
(1 ) The state and the Government of Iran as well
as any political subdivision, agency, or instru­

3

Property; property interests.

Except as defined in § 5 3 5 .203(f) for the purposes
of that section, the terms “property” and “property
interest” or “property interests” shall include, but not
by way of limitation, money, checks, drafts, bullion,
bank deposits, savings accounts, debts, indebtedness,
obligations, notes, debentures, stocks, bonds, coupons,
any other financial securities, bankers’ acceptances,
mortgages, pledges, liens or other rights in the nature
of security, warehouse receipts, bills of lading, trust
receipts, bills of sale, any other evidences of title,
ownership or indebtedness, powers of attorney, goods,
wares, merchandise, chattels, stocks on hand, ships,
goods on ships, real estate mortgages, deeds of trust,
vendors’ sales agreements, land contracts, real estate
and any interest therein, leaseholds, ground rents, op­
tions, negotiable instruments, trade acceptances, roy­
alties, book accounts, accounts payable, judgments,
patents, trademarks or copyrights, insurance policies,
safe deposit boxes and their contents,, annuities, pool­

(c )
The authorization contained in this section
shall expire at the close of business on Decem ber 14,
1979.

ing agreements, contracts of any nature whatsoever,
and any other property, real, personal, or mixed, tan­
gible or intangible, or interest or interests therein,
present, future or contingent.

§535.532
tions.

§ 535.329 Person subject to the jurisdiction of the
United States.

(a ) Banking institutions within the United States
are hereby authorized to complete, on or before No­
vember 21, 1979, purchases and sales made prior to
the effective date of securities purchased or sold for
the account of Iran or an Iranian entity provided the
following terms and conditions are complied with,
respectively:

The term “person subject to the jurisdiction of the
United States” includes:
( a ) Any person wheresoever located who is a citi­
zen or resident of the United States;
( b ) Any person actually within the United States;

(1 ) The proceeds of such sale are credited to a
blocked account in a banking institution in the
name of the person for whose account the sale
was made; and

( c ) Any corporation organized under the laws of
the United States or of any state, territory, possession,
or district of the United States; and

(2 ) The securities so purchased are held in a
blocked account in a banking institution in the
name of the person for whose account the pur­
chase was made.

( d ) Any partnership, association, corporation, or
other organization wheresoever organized or doing
business which is owned or controlled by persons
specified in paragraphs ( a ) , ( b ) , o r ( c ) of this section.

(b ) This section does not authorize the crediting
of the proceeds of the sale of securities held in a
blocked account or a sub-account thereof, to a blocked
account or sub-account under any name or designa­
tion which differs from the name or designation of the
specific blocked account or sub-account in which such
securities were held.

SU BPA RT D — [R E S E R V E D ]
SU BPA RT E — L IC E N SE S
§535.531

Completion of certain securities transac­

Payment of certain checks and drafts.

( a ) Any banking institution within the United
States is hereby authorized to make payments from
blocked accounts with such banking institution:

SU BPA RT F — [R E S E R V E D ]

(1 ) O f checks and drafts drawn or issued prior to
the effective date, Provided, that:

SU BPA RT G — P E N A L T IE S
§ 535.701

( i ) The amount involved in any one pay­
ment, acceptance, or debit does not exceed
$500; or

Penalties.

(a ) Attention is directed to section 206 of the In­
ternational Em ergency Economic Powers Act which
provides in p art:

(ii) The check or draft was within the
United States in process of collection by a
domestic bank on or prior to the effective date
and does not exceed $50,000; and

( a ) A civil penalty of not to exceed $10,000 may
be imposed on any person who violates any
license, order, or regulation issued under this
title.

(2 ) Of documentary drafts drawn under irrevoca­
ble letters of credit issued or confirmed by a
domestic bank prior to the effective date.

( b ) Whoever willfully violates any license, order,
or regulation issued under this title shall, upon
conviction be fined not more than $50,000, or,
if a natural person, may be imprisoned for not
more than ten years, or both; and any officer,
director, or agent of any corporation who know­
ingly participates in such violation may be
punished by a like fine, imprisonment or both.

( b ) This section does not authorize any payment
to Iran or an Iranian entity except payments into a
blocked account in a domestic bank unless Iran or
the Iranian entity is otherwise licensed to receive
such payment.

4

SUBPART H — [RESERVED]

This section of the International Em ergency E co ­
nomic Powers Act is applicable to violations of any
provision of this part and to violations of the provi­
sions of any license, ruling, regulation, order, direc­
tion or instruction issued by or pursuant to the direc­
tion or authorization of the Secretary of the Treasury
pursuant to this part or otherwise under the Inter­
national Emergency Economic Powers Act.

SUBPART I — MISCELLANEOUS PROVISIONS

§ 535.901

Dollar Accounts at banks abroad.

Any domestic bank is hereby authorized to effect
withdrawals or other transfers from any account held
in the name of a non-Iranian bank located in a foreign
country, provided such non-Iranian foreign bank is
not a person subject to the jurisdiction of the United
States.

(b )
Attention is also directed to 18 U.S.C. 1001
which provides:
Whoever, in any m atter within the jurisdiction of
any department or agency of the United States know­
ingly and willfully falsifies, conceals or covers up by
any trick, scheme, or device a material fact, or
makes any false, fictitious or fraudulent statements or
representations or makes or uses any false writing or
document knowing the same to contain any false, fic­
titious or fraudulent statement or entry, shall be fined
not more than $10,000 or imprisoned not more than
five years, or both.

G. William Miller
Secretary of the Treasury

November 14, 1979

5

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