[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]



=======================================================================
-----------------------------------------------------------------------

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.

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

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

    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 without 
charge in WordPerfect, ASCII, and Adobe AcrobatTM readable (*.PDF) 
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 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