[Federal Register Volume 60, Number 126 (Friday, June 30, 1995)]
[Rules and Regulations]
[Pages 34144-34147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16122]



-----------------------------------------------------------------------


DEPARTMENT OF THE TREASURY
31 CFR Part 585


Federal Republic of Yugoslavia (Serbia and Montenegro) Sanctions 
Regulations; Bosnian Serb Sanctions

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule; amendments.

-----------------------------------------------------------------------

SUMMARY: This rule amends the Federal Republic of Yugoslavia (Serbia 
and Montenegro) Sanctions Regulations to: Implement Executive Order 
12934 of October 25, 1994, imposing sanctions on the Bosnian Serb 
forces and authorities and the areas of the Republic of Bosnia and 
Herzegovina that they control, in view of United Nations Security 
Council Resolution No. 942; provide an agency interpretation of the new 
prohibitions as preventing certain financial services to the areas of 
the Republic of Bosnia and Herzegovina under the control of Bosnian 
Serb forces and to entities worldwide owned or controlled from such 
areas; make additional conforming amendments to reflect the 
implementation of Executive Order 12846 of April 25, 1993; and make 
certain clarifying and technical amendments.

EFFECTIVE DATE: June 30, 1995.

FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing, 
tel.: 202/622-2480, 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

    This document is available as an electronic file on The Federal 
Bulletin Board the day of publication in the Federal Register. By modem 
dial 202/512-1387 and type ``/GO/FAC'' or call 202/512-1530 for disks 
or paper copies. This file is available for downloading in WordPerfect 
5.1, ASCII, and Postscript formats. The document is also accessible for 
downloading in ASCII format without charge from Treasury's Electronic 
Library (``TEL'') in the ``Business, Trade and Labor Mall'' of the 
FedWorld bulletin board. By modem dial 703/321-3339, and select self-
expanding file ``T11FR00.EXE'' 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).

Background

    On October 25, 1994, the President issued Executive Order 12934, 59 
FR 54117 (October 27, 1994), expanding the scope of the national 
emergency declared in Executive Order 12808 to extend certain sanctions 
to the Bosnian Serb forces and authorities and the areas of the 
Republic of Bosnia and Herzegovina that they control, taking into 
account the provisions of United Nations Security Council Resolution 
No. 942 of September 23, 1994. Effective October 25, 1994, the 
Executive order blocks all property and interests in property of the 
Bosnian Serb military and paramilitary forces and the authorities in 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces; 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 above. A partial listing of such persons was published on 
April 18, 1995. 60 FR 19448. The part heading is revised to read: ``The 
Federal Republic of Yugoslavia (Serbia and Montenegro) and the Bosnian 
Serb-Controlled Areas of the Republic of Bosnia and Herzegovina 
Sanctions Regulations, 31 CFR part 585 (the ``Regulations''),'' and 
Sec. 585.201 of the Regulations is amended to implement this provision. 
E.O. 12934, section 1.
    Section 585.217 of the Regulations is amended to implement the 
Executive order's prohibition in section 2(b) against the entry of 
U.S.-flag vessels into the riverine ports of those areas of the 
Republic of Bosnia and Herzegovina controlled by Bosnian Serb forces. 
Section 585.218 of the Regulations, which already prohibits exportation 
to, importation from, and transhipment through those areas of the 
Republic of Bosnia and Herzegovina controlled by Bosnian Serb forces, 
is amended to reflect the Executive order's prohibition in section 2(a) 
against the provision or exportation of services to those areas or to 
any person for the purpose of any business carried on in those areas, 
either from the United States or by a U.S. person.
    The prohibitions of Executive Order 12934 apply notwithstanding any 
prior contracts, international agreements, licenses or authorizations, 
but may be modified by regulation, order or license issued pursuant to 
that Executive order.
    In addition to implementing the provisions of Executive Order 
12934, this final rule amends several provisions of the Regulations 
pertaining to property interests blocked under Sec. 585.201 by 
substituting a simple reference to ``property or interests in property 
blocked pursuant to Sec. 585.201'' for a lengthy list of all persons 
whose property interests are blocked pursuant to Executive Orders 
12808, 12810, 12846, or 12934.
    Section 585.420 is added interpreting new Secs. 585.201(c) and 
585.218(b) of the Regulations to prohibit the transfer of funds by U.S. 
financial institutions to or for the benefit of persons whose property 
and interests in property are blocked pursuant to Sec. 585.201(c), on 
the basis that such transfers are blocked by operation of law upon 
their initiation, and that such transfers involve an illegal 
exportation of financial services from 

[[Page 34145]]
the United States or by a United States person.
    Finally, paragraph (c) of Sec. 585.512 of the Regulations, which 
states that charge cards may not be used by U.S. persons authorized to 
engage in certain travel-related transactions under this section while 
in the FRY (S&M), is amended to clarify (but not modify) the 
authorizations contained in that section.
    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, Foreign 
investments in United States, Foreign trade, Penalties, Reporting and 
recordkeeping requirements, Securities, Transportation, Yugoslavia.
    For the reasons set forth in the preamble, 31 CFR part 585 is 
amended as set forth below:

    1. The heading to part 585 is revised to read as follows:

PART 585--FEDERAL REPUBLIC OF YUGOSLAVIA (SERBIA AND MONTENEGRO) 
AND BOSNIAN SERB-CONTROLLED AREAS OF THE REPUBLIC OF BOSNIA AND 
HERZEGOVINA SANCTIONS REGULATIONS

    2. The authority citation for part 585 is revised to read as 
follows:
    Authority: 3 U.S.C. 301; 22 U.S.C. 287c; 49 U.S.C. 40106(b); 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 (October 27, 
1994).

Subpart B--Prohibitions

    3. Section 585.201 is amended as follows: In paragraph (a) by 
removing ``are'' wherever it appears and adding ``is''; by removing 
``come'' wherever it appears and adding ``comes''; by redesignating 
paragraph (c) as paragraph (d); and by adding new paragraph (c) to read 
as follows:


Sec. 585.201  Prohibited transactions involving blocked property; 
transactions with respect to securities.

* * * * *
    (c) Except as otherwise authorized, and notwithstanding the 
existence of any rights or obligations conferred or imposed by any 
international agreement or any contract entered into or any license or 
permit granted before 11:59 p.m. EDT, October 25, 1994, no property or 
interest in property of the following persons that is in the United 
States, that hereafter comes within the United States, or that is or 
hereafter comes within the possession or control of United States 
persons, including their overseas branches, may be transferred, paid, 
exported, withdrawn, or otherwise dealt in:
    (1) The Bosnian Serb military and paramilitary forces and the 
authorities in those areas of the Republic of Bosnia and Herzegovina 
under the control of those forces;
    (2) Any entity, including any commercial, industrial, or public 
utility undertaking, organized or located in those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces;
    (3) Any entity, wherever organized or located, which is owned or 
controlled directly or indirectly by any person in, or resident in, 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces; and
    (4) Any person acting for or on behalf of any person included 
within the scope of paragraphs (c)(1), (2) or (3) of this section.
    4.Paragraphs (a), (b), and (e) of Sec. 585.202 are revised to read 
as follows:


Sec. 585.202  Effect of transfers violating the provisions of this 
part.

    (a) Any transfer after the effective date specified in Sec. 585.301 
which is in violation of any provision of this part or of any 
regulation, order, directive, ruling, instruction, license, or other 
authorization hereunder and involves any property or interest in 
property blocked pursuant to Sec. 585.201 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 or 
property interests.
    (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 interest in, any property or interest in property 
blocked pursuant to Sec. 585.201, unless the person with whom such 
property is held or maintained, prior to such date, had written notice 
of the transfer or by any written evidence had recognized such 
transfer.
* * * * *
    (e) Unless licensed or authorized pursuant to this part, any 
attachment, judgment, decree, lien, execution, garnishment, or other 
judicial process is null and void with respect to any property or 
interest in property blocked pursuant to Sec. 585.201.


Sec. 585.203  [Amended]

    5. Section 585.203 is amended as follows: In paragraph (a)(2) by 
removing ``entity of the FRY (S&M)'' and adding ``person(s)'' in its 
place, and in paragraph (c) by revising the first sentence to read as 
follows: ``U.S. financial institutions receiving instructions to 
execute a payment or transfer of funds they hold in which a person has 
an interest whose property or interests in property are blocked 
pursuant to Sec. 585.201, shall block the funds and provide written 
notification to the Compliance Programs Division, Office of Foreign 
Assets Control, U.S. Treasury Department, 1500 Pennsylvania Ave., NW--
2131 Annex, Washington, DC 20220, within 10 business days from the 
value date of the payment or transfer.''.
    6. Section 585.217 is revised to read as follows:


Sec. 585.217  Entry into the territorial waters of the FRY (S&M) or the 
riverine ports of the Republic of Bosnia and Herzegovina prohibited.

    Except as otherwise authorized by the Director of the Office of 
Foreign Assets Control pursuant to this part, no vessel registered in 
the United States or owned or controlled by U.S. persons, other than a 
United States naval vessel, may enter:
    (a) The territorial waters of the FRY (S&M); or
    (b) The riverine ports of those areas of the Republic of Bosnia and 
Herzegovina under the control of Bosnian Serb forces.
    7. Section 585.218 is revised to read as follows:


Sec. 585.218  Trade in United Nations Protected Areas of Croatia and 
those areas of the Republic of Bosnia and Herzegovina under the control 
of Bosnian Serb forces.

    The following are prohibited, except as otherwise authorized by the 
Director of the Office of Foreign Assets Control pursuant to this part:
    (a) Any dealing by a United States person relating to the 
importation from, exportation to, or transshipment of goods through the 
United Nations Protected Areas in the Republic of Croatia and those 
areas of the Republic of Bosnia and Herzegovina under the control of 
Bosnian Serb forces, or 

[[Page 34146]]
activity of any kind that promotes or is intended to promote such 
dealing (see Sec. 585.524); and
    (b) The provision or exportation of services to those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces, or to any person for the purpose of any business carried on in 
those areas, either from the United States or by a United States 
person.

Subpart C--General Definitions

    8. Section 585.301 is amended as follows: In paragraph (a) by 
removing the reference ``Secs. 585.201 (a) & (c)'' and adding 
``Secs. 585.201 (a) and (d)'' in its place; in paragraph (e) by adding 
``(a)'' after the references to ``585.217'' and ``585.218''; and by 
removing ``and'' from the end of paragraph (d) and the period from the 
end of paragraph (e), by adding a semicolon and ``and'' to the end of 
paragraph (e), and by adding a new paragraph (f) to read as follows:
Sec. 585.301 Effective date.
* * * * *
    (f) With respect to Secs. 585.201(c), 585.217(b), and 585.218(b), 
11:59 p.m. EDT, October 25, 1994.
    9. Section 585.302 is revised to read as follows:


Sec. 585.302  Blocked account; blocked property.

    The terms blocked account and blocked property shall mean any 
account and any property or interest in property blocked pursuant to 
Sec. 585.201 with respect to which payments, transfers, exportations, 
withdrawals, or other dealings may not be made or effected except 
pursuant to an authorization or license from the Office of Foreign 
Assets Control authorizing such action.

Subpart D--Interpretations

    10. Section 585.403 is revised to read as follows:


Sec. 585.403  Termination and acquisition of an interest in blocked 
property.

    (a) Whenever a transaction licensed or authorized by or pursuant to 
this part results in the transfer of property (including any property 
interest) from a person whose property or property interests are 
blocked pursuant to Sec. 585.201, such property shall no longer be 
deemed to be property blocked pursuant to Sec. 585.201, unless there 
exists in the property another interest that is blocked pursuant to 
Sec. 585.201 or any other part of this chapter, the transfer of which 
has not been effected pursuant to license or other authorization.
    (b) Unless otherwise specifically provided in a license or 
authorization issued pursuant to this part, if property (including any 
property interest) is transferred or attempted to be transferred to a 
person whose property or property interests are blocked pursuant to 
Sec. 585.201, such property shall be deemed to be property in which 
that person has an interest and therefore blocked.


Sec. 585.405  [Amended]

    11. Section 585.405 is amended by removing ``the Government of the 
FRY (S&M) or the former Government of the Social Federal Republic of 
Yugoslavia,'' and adding ``a person whose property or interests in 
property are blocked pursuant to Sec. 585.201'', and by removing 
``and'' between the references to ``Sec. 585.201'' and ``Secs. 585.204-
585.212'', adding a comma in its place, and adding ``and Secs. 585.217-
585.218'' to the end of the first sentence.
    12. Paragraph (a) of Sec. 585.406 is revised to read as follows:


Sec. 585.406  Extensions of credits or loans.

    (a) The prohibition in Sec. 585.210 applies to the unlicensed 
renewal of credits or loans held in the name of a person whose property 
or interests in property are blocked pursuant to Sec. 585.201 that were 
in existence on the effective date, whether by affirmative action or 
operation of law.
* * * * *
    13. Paragraph (a) of Sec. 585.408 is revised to read as follows:


Sec. 585.408  Offshore transactions.

    (a) The prohibitions contained in Secs. 585.201 and 585.206 apply 
to transactions by U.S. persons in locations outside the United States 
with respect to property in which the U.S. person knows, or has reason 
to know, that a person whose property or interests in property are 
blocked pursuant to Sec. 585.201 has or has had an interest since the 
effective date specified in Sec. 585.301, or that such property is held 
in the name of a person whose property or interests in property are 
blocked pursuant to Sec. 585.201.
* * * * *
    14. The note to Sec. 585.412 is revised to read as follows:


Sec. 585.412  Release of goods originating in the FRY (S&M) from a 
bonded warehouse or foreign trade zone.

* * * * *
    (Note: property blocked pursuant to Sec. 585.201 may not be 
released unless authorized or licensed by the Office of Foreign 
Assets Control.)


Sec. 585.413  [Amended]

    15. Section 585.413 is amended by revising the second sentence to 
read as follows: ``However, any payment in connection with such 
importation is subject to the prohibitions contained in Secs. 585.201 
and 585.210.''.
    16. Section 585.420 is added to subpart D to read as follows:


Sec. 585.420  Prohibited transfer of funds involving those areas of the 
Republic of Bosnia and Herzegovina under the control of Bosnian Serb 
forces.

    Sections 585.201(c) and 585.218(b) prohibit U.S. financial 
institutions from committing or transferring, directly or indirectly, 
funds or other financial or economic resources to or for the benefit of 
any person whose property or interests in property are blocked pursuant 
to Sec. 585.201(c).

Subpart E--Licenses, Authorizations, and Statements of Licensing 
Policy

    17. The introductory text and paragraph (c) of Sec. 585.504 are 
revised to read as follows:


Sec. 585.504  Investment and reinvestment of certain funds.

    U.S. financial institutions are hereby authorized to invest and 
reinvest assets blocked pursuant to Sec. 585.201, subject to the 
following conditions:
* * * * *
    (c) No immediate financial or economic benefit accrues (e.g., 
through pledging or other use) to any person whose property or 
interests in property are blocked pursuant to Sec. 585.201.
    18. Paragraphs (a) and (b) of Sec. 585.505 are revised to read as 
follows:


Sec. 585.505  Completion of certain transactions related to bankers 
acceptances authorized.

    (a) Persons other than those whose property or interests in 
property are blocked pursuant to Sec. 585.201 are authorized to buy, 
sell, and satisfy obligations with respect to bankers acceptances, and 
to pay under deferred payment undertakings, relating to a property 
interest blocked pursuant to Sec. 585.201, as long as the bankers 
acceptances were created or the deferred payment undertakings were 
incurred prior to the effective date.
    (b) Persons other than those whose property or interests in 
property are blocked pursuant to Sec. 585.201 are authorized to buy, 
sell, and satisfy obligations with respect to bankers acceptances, and 
to pay under deferred payment undertakings, relating to the importation 
or exportation of goods to or from the FRY (S&M) that do not involve a 
property interest blocked 

[[Page 34147]]
pursuant to Sec. 585.201, as long as the bankers acceptances or the 
deferred payment undertakings were accepted prior to the effective 
date.
* * * * *
    19. The section heading and paragraphs (a) and (b) of Sec. 585.506 
are revised to read as follows:


Sec. 585.506  Payments of obligations to persons within the United 
States authorized.

    (a) The transfer of funds after the effective date by, through, or 
to any U.S. financial institution or other U.S. person not blocked 
pursuant to this chapter solely for the purpose of payment of 
obligations of a person whose property or interests in property are 
blocked pursuant to Sec. 585.201 to persons or accounts within the 
United States is authorized, provided that the obligation arose prior 
to the effective date, and the payment requires no debit to a blocked 
account. Property is not blocked by virtue of being transferred or 
received pursuant to this section.
    (b) A person receiving payment under this section may distribute 
all or part of that payment to any person, provided that any such 
payment to a person whose property or interests in property are blocked 
pursuant to Sec. 585.201 must be to a blocked account in a U.S. 
financial institution.
* * * * *


Sec. 585.512  [Amended]

    20. Paragraph (c) of Sec. 585.512 is amended by removing ``, or to 
engage in transactions, while traveling in the FRY (S&M).'' and by 
adding ``in the FRY (S&M) in connection with any transactions 
authorized by this section.'' in its place.


Sec. 585.524  [Amended]

    21. The section heading of Sec. 585.524 is amended by removing 
``Serb-controlled areas of Bosnia-Hercegovina'' and adding ``those 
areas of the Republic of Bosnia and Herzegovina controlled by Bosnian 
Serb forces'' in its place. Paragraphs (a) and (b) of Sec. 585.524 are 
amended by removing ``Bosnia-Hercegovina'' wherever it appears and 
adding ``Bosnia and Herzegovina'' in its place.

    Dated: June 23, 1995.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
    Approved: June 23, 1995.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 95-16122 Filed 6-28-95; 9:20 am]
BILLING CODE 4810-25-F