[Federal Register Volume 61, Number 13 (Friday, January 19, 1996)]
[Rules and Regulations]
[Pages 1282-1284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-639]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 585
Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
Sanctions Regulations; Partial Suspension of Sanctions
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule; amendments.
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SUMMARY: This rule amends the Federal Republic of Yugoslavia (Serbia
and Montenegro) and Bosnian Serb-Controlled Areas of the Republic of
Bosnia and Herzegovina Sanctions Regulations to authorize prospectively
all transactions with respect to the Federal Republic of Yugoslavia
(Serbia and Montenegro) otherwise prohibited, while assets previously
blocked remain blocked. The rule also permits the return to nonblocked
remitters of certain funds transfers interdicted during the period of
the sanctions. Certain other interdicted transfers are directed to be
deposited into blocked accounts.
EFFECTIVE DATE: January 16, 1996.
FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing,
tel.: 202/622-2480, Dennis P. Wood, Chief of Compliance Programs, tel.:
202/622-2490 or William B. Hoffman, Chief Counsel, tel.: 202/622-2410,
Office of Foreign Assets Control, Department of the Treasury,
Washington, DC 20220.
SUPPLEMENTARY INFORMATION:
Electronic Availability
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By modem dial 703/321-3339, and select the appropriate self-expanding
file in TEL. For Internet access, use one of the following protocols:
Telnet = fedworld.gov (192.239.93.3); World Wide Web (Home Page) =
http://www.fedworld.gov; FTP = ftp.fedworld.gov (192.239.92.205).
[[Page 1283]]
Background
On November 21, 1995, in Dayton, Ohio, the presidents of the
Federal Republic of Yugoslavia (Serbia and Montenegro) (the ``FRY
(S&M)''), the Republic of Bosnia and Herzegovina, and the Republic of
Croatia initialled the General Framework Agreement for Peace in Bosnia
and Herzegovina and the Annexes thereto (collectively, the ``Peace
Agreement''), which was signed by the parties in Paris on December 14,
1995. On November 22, the United Nations Security Council passed
Resolution 1022 (the ``Resolution''), immediately and indefinitely
suspending economic sanctions against the FRY (S&M). Sanctions against
the Bosnian Serb forces and authorities and the areas of the Republic
of Bosnia and Herzegovina that they control remain in effect until
their troop withdrawal to agreed borders. In addition, the Resolution
provides for the release of funds and assets previously blocked
pursuant to sanctions against the FRY (S&M), provided that such funds
and assets that are subject to claims and encumbrances, or that are the
property of persons deemed insolvent, remain blocked until ``released
in accordance with applicable law.'' The Resolution further provides
that the unblocking of assets must be effected without prejudice to the
claims of successor states to the Former Socialist Federal Republic of
Yugoslavia. Finally, the Resolution provides for the reimposition of
sanctions against the FRY (S&M) if either the FRY (S&M) or the Bosnian
Serbs fail significantly to meet their obligations under the Peace
Agreement.
Suspension of Sanctions
In light of the Resolution, and pursuant to the requirements of
section 1511(e)(2) of the National Defense Authorization Act for Fiscal
Year 1994 (Public Law 103-160), the President has issued Presidential
Determination No. 96-7 of December 27, l995, directing the Secretary of
the Treasury to take appropriate action to suspend the application of
the sanctions imposed pursuant to Executive Orders No. 12808 of May 30,
l992, 12810 of June 5, l992, 12831 of January 15, l993, and 12846 of
April 25, l993. Therefore, the Office of Foreign Assets Control is
amending the Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnian Serb-Controlled Areas of the Republic of Bosnia and Herzegovina
Sanctions Regulations, 31 CFR part 585 (the ``Regulations''), by adding
Sec. 585.525 to the Regulations to authorize prospectively those
transactions previously prohibited with respect to the FRY (S&M). With
the exceptions set forth below, property and interests in property
previously blocked remain blocked until provision is made to address
claims or encumbrances with respect to such property and interests in
property, including the claims of the successor states of the former
Yugoslavia. The United States is currently examining options to address
claims.
Debt Trading Involving FRY (S&M) Interests
Debt for which the former National Bank of Yugoslavia or a bank
located in the FRY (S&M) bears joint or several liability remains
blocked and secondary market trading remains governed by 585.509,
except for prospective transactions of U.S. persons involving debt that
was not subject to U.S. jurisdiction immediately prior to the
suspension of sanctions against the FRY (S&M) on January 16, 1996.
Thus, pursuant to Sec. 585.509(b), trading is not permitted in debt
representing original borrowings of Serbian or Montenegrin banks, or of
the former National Bank of Yugoslavia where another original obligor
cannot be determined, that was held in the United States or in the
possession or control of a U.S. person immediately prior to January 16,
1996. Trading by U.S. persons in such debt that was not subject to U.S.
jurisdiction immediately prior to January 16, 1996, such as Serbian or
Montenegrin debt held abroad by non-U.S. persons, is not prohibited
because the debt was not property blocked by U.S. law.
Similarly, the conditions in Sec. 585.509(a) and (d)(1) and (d)(2)
on trading in blocked debt representing original obligations of banks
in Bosnia, Croatia, Macedonia or Slovenia, continue to apply to such
debt held within the United States or in the possession or control of a
U.S. person immediately prior to January 16, 1996. Debt eligible for
trading under these provisions, however, may now also be traded with
persons whose property and interests in property were blocked pursuant
to Sec. 585.201(a), (b) or (d) prior to January 16, 1996 (including the
Government of the FRY (S&M) and entities organized or located in the
FRY (S&M)). The certification and reporting requirements of
Sec. 585.509(c) and (d)(3) no longer apply with respect to trading in
such debt with or on behalf of these persons. U.S. persons continue to
be prohibited from trading in such debt with persons blocked pursuant
to Sec. 585.201(c) (pertaining to the Bosnian Serbs).
Funds Transfers
The Regulations are further amended to add Sec. 585.526,
authorizing by general license the unblocking and return to remitters
of funds which came into the possession or control of U.S. financial
institutions through wire transfer instructions or check remittances
that were not destined for an account established by a blocked person
on the books of a U.S. financial institution. Such funds may not,
however, be returned if they were remitted by or through the Government
of the FRY (S&M) or another person whose property or interests in
property were blocked pursuant to Sec. 585.201 of the Regulations prior
to the suspension of sanctions.
The authorization contained in Sec. 585.526 does not apply to
transfers of funds originally destined for credit to accounts
established by blocked persons on the books of U.S. financial
institutions. Such funds are directed to be transferred for credit to
such accounts, to be maintained in a blocked status.
Finally, it is emphasized that the authorizations contained in
Secs. 585.525 and 585.526 do not apply to property and interests in
property of the Bosnian Serb forces and authorities and entities
organized or located in those areas of the Republic of Bosnia and
Herzegovina under their control; entities owned or controlled directly
or indirectly by any person in, or resident in, those areas; and any
person acting for or on behalf of any of the foregoing.
Because the Regulations involve a foreign affairs function,
Executive Order 12866 and 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. Because no notice of proposed rulemaking is required for
this rule, the Regulatory Flexibility Act, 5 U.S.C. 601-612, does not
apply.
List of Subjects in 31 CFR Part 585
Administrative practice and procedure, Banks, banking, Blocking of
assets, Foreign investments in United States, Foreign trade, Penalties,
Reporting and recordkeeping requirements, Securities, Specially
designated nationals, Transportation, Yugoslavia.
For the reasons set forth in the preamble, 31 CFR part 585 is
amended as set forth below:
1. The authority citation for part 585 continues to read as
follows:
[[Page 1284]]
Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 49 U.S.C. App. 1514; 50
U.S.C. 1601-1651; 50 U.S.C. 1701-1706; E.O. 12808, 57 FR 23299, 3
CFR, 1992 Comp., p. 305; E.O. 12810, 57 FR 24347, 3 CFR, 1992 Comp.,
p. 307; E.O. 12831, 58 FR 5253, 3 CFR, 1993 Comp., p. 576; E.O.
12846, 58 FR 25771, 3 CFR, 1993 Comp., p. 599; E.O. 12934, 59 FR
54117, 3 CFR, 1994 Comp., p. 930.
Subpart E -- Licenses, Authorizations, and Statements of Licensing
Policy
2. Section 585.525 is added to subpart E to read as follows:
Sec. 585.525 Authorization of certain new transactions with respect to
the FRY (S&M).
(a) Notwithstanding the provisions of subpart B of this part,
transactions and activities otherwise prohibited by Secs. 585.201(a)(b)
& (d) (blocked property), 585.204 (imports), 585.205 (exports), 585.206
(dealing in exports and imports), 585.207 (transportation-related
transactions), 585.208 (aircraft), 585.209 (performance of contracts),
585.210 (transfer of funds), 585.211 (sporting events), 585.212
(scientific and technical cooperation, cultural exchanges), 585.215
(detention of conveyances and cargo), 585.217(a) (entry of U.S. vessels
into territorial waters), 585.218(a) (insofar as that paragraph relates
to trade in the United Nations Protected Areas of Croatia), and the
restrictions on certain travel-related transactions (including those
for commercial travel) delineated in Sec. 585.512, are hereby
authorized on or after January 16, 1996, provided that no such
transaction results in a debit to an account blocked prior to December
27, 1995, or a transfer of property blocked prior to December 27, 1995,
unless such debit or transfer is independently authorized by or
pursuant to this part.
(b)(1) All provisions of Sec. 585.509 continue to apply to debt for
which the National Bank of Yugoslavia or a bank located in the FRY
(S&M) bears joint or several liability and which, immediately prior to
January 16, 1996, was held in the United States or was within the
possession or control of a U.S. person, except that the certification
and reporting requirements contained in Sec. 585.509(c) and (d)(3) no
longer apply to transactions with or for the benefit of persons with
respect to whom the blocking provisions of Sec. 585.201(a),(b) and (d)
have been suspended pursuant to this section.
(2) Transactions by U.S. persons involving debt for which the
National Bank of Yugoslavia or a bank located in the FRY (S&M) bears
joint or several liability but that was not held in the United States
or within the possession or control of a U.S. person immediately prior
to January 16, 1996 are authorized, provided that no debit or transfer
to a blocked account is authorized.
(c) Transactions and activities prohibited by Secs. 585.201(c)
(blocked property), 585.217(b) (entry of U.S. vessels into riverine
ports), 585.218(a) (insofar as that paragraph relates to trade in
Bosnian Serb-controlled areas of Bosnia and Herzegovina), and
585.218(b) (services to Bosnian Serb-controlled areas), remain
prohibited and are not authorized by this section.
(d) The authorizations contained in this section do not eliminate
the need to comply with regulatory requirements not administered by the
Office of Foreign Assets Control, including aviation, financial and
trade requirements administered by other federal agencies.
4. Section 585.526 is added to subpart E to read as follows:
Sec. 585.526 Authorization for release of certain blocked transfers by
U.S. financial institutions.
(a) U.S. financial institutions are authorized to unblock and
return to the remitting party funds which came into their possession or
control through wire transfer instructions or check remittances that
were not destined for an account on the books of a U.S. financial
institution, which account was established by a person whose property
or interests in property were blocked immediately prior to January 16,
1996 pursuant to Sec. 585.201 (a ``blocked person''), provided that the
funds may not be so unblocked and returned if they were remitted by or
through a blocked person.
(b)(1) Nothing in this section authorizes the unblocking and
release of funds destined for credit:
(i) to accounts established by blocked persons on the books of U.S.
financial institutions; or
(ii) to Beogradska Banka d.d. New York Agency or Jugobanka d.d. New
York Agency for further credit to account holders. Both banks are
blocked persons.
(2) Funds described in paragraph (b)(1) of this section that are
not already held in an account described in paragraph (b)(1)(i) must be
transferred to such an account by January 29, 1996, where the funds
must be maintained in blocked status pursuant to Sec. 585.201. Nothing
in this section authorizes transfers involving property or property
interests blocked pursuant to Sec. 585.201(c) (blocking property and
interests in property of the Bosnian Serb forces and authorities in the
areas of the Republic of Bosnia and Herzegovina such forces control;
entities organized or located in those areas; entities owned or
controlled directly or indirectly by any person in, or resident in,
those areas; and any person acting for or on behalf of any of the
foregoing persons).
Dated: January 4, 1996.
Steven I. Pinter,
Acting Director, Office of Foreign Assets Control.
Approved: January 5, 1996.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 96-639 Filed 1-16-96; 4:48 pm]
BILLING CODE 4810-25-F
