[Public Papers of the Presidents of the United States: George H. W. Bush (1992-1993, Book II)]
[December 30, 1992]
[Pages 2218-2220]
[From the U.S. Government Publishing Office www.gpo.gov]



[[Page 2218]]


Letter to Congressional Leaders Reporting on Economic Sanctions Against 
Libya
December 30, 1992

Dear Mr. Speaker:   (Dear Mr. President:)
    I hereby report to the Congress on the developments since my last 
report of July 7, 1992, concerning the national emergency with respect 
to Libya that was declared in Executive Order No. 12543 of January 7, 
1986. This report is submitted pursuant to section 401(c) of the 
National Emergencies Act, 50 U.S.C. 1641(c); section 204(c) of the 
International Emergency Economic Powers Act (``IEEPA''), 50 U.S.C. 
1703(c); and section 505(c) of the International Security and 
Development Cooperation Act of 1985, 22 U.S.C. 2349aa-9(c).
    1. Since my last report on July 7, 1992, the Libyan Sanctions 
Regulations (the ``Regulations''), 31 C.F.R. Part 550, administered by 
the Office of Foreign Assets Control (``FAC'') of the Department of the 
Treasury have been amended twice. The first amendment, published on 
September 11, 1992, 57 Fed. Reg. 41696, revoked (1) the authority in 
section 550.511 for transfers between blocked accounts in different 
domestic banking institutions and (2) section 550.515, which authorized 
receipt of payments from unblocked sources for obligations of the 
Government of Libya to persons in the United States. These classes of 
transactions are now prohibited unless specifically licensed by FAC. In 
addition, the amendment required banking institutions to pay interest on 
blocked funds and authorized debits to blocked accounts by U.S. banking 
institutions for normal service charges. A copy of the amendment is 
attached to this report.
    Section 550.511 of the Regulations previously permitted transfers of 
funds between blocked accounts in different domestic banking 
institutions, provided the name or designation of the accounts remained 
identical. Out of concern for possible abuse of such funds movements, 
future transfers of this nature may only be authorized by specific 
license.
    Section 550.515 of the Regulations had previously authorized the 
transfer of fresh funds through or to any banking institution or other 
person within the United States solely for purposes of payment of 
obligations owed by the Libyan government to persons within the United 
States. ``Fresh funds'' are funds from an unblocked account outside the 
United States. To ensure that transfers from the Libyan government are 
received only for obligations lawfully arising within the context of the 
Libyan Sanctions Regulations, such payments must now be authorized by 
specific license.
    Another amendment, published on November 17, 1992, 57 Fed. Reg. 
54176, added the names of six companies and banks to Appendix A, the 
list of organizations determined to be within the term ``Government of 
Libya'' (Specially Designated Nationals of Libya), revised the 
information for one company previously listed at Appendix A, and added 
the names of five individuals to Appendix B, the list of individuals 
determined to be Specially Designated Nationals of Libya. A Specially 
Designated National (``SDN'') of Libya is an entity or individual that 
is owned or controlled by the Government of Libya or that engages in 
transactions directly or indirectly on behalf of the Libyan government. 
A copy of the amendment is attached to this report.
    The most significant of these designations is the listing of a bank 
in the United Arab Emirates, the Arab Bank for Investment and Foreign 
Trade, also known as ``ARBIFT,'' which has been identified by FAC as an 
institution that engages in U.S. dollar clearing transactions on behalf 
of the Government of Libya. The ARBIFT is held 42 percent by the Libyan 
Arab Foreign Bank, another SDN of Libya, while AR- BIFT's chairman also 
serves as the Governor of the Central Bank of Libya. Two other Libyan-
controlled banks, two Libyan-owned petroleum marketing firms, and an 
insurance company controlled by Libya also were added to the Libyan SDN 
list. All five of the individuals named to the SDN list are senior 
Libyan banking officials who act on

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behalf of the Government of Libya.
    2. During the current 6-month period, FAC made numerous decisions 
with respect to applications for licenses to engage in transactions 
under the Regulations, issuing 81 licensing determinations--both 
approvals and denials. Consistent with FAC's ongoing scrutiny of banking 
transactions, the majority of the determinations (70) concerned requests 
to unblock bank accounts initially blocked because of an apparent Libyan 
interest. An additional seven determinations involved license 
applications for export sales transactions from the United States to 
Libya. Finally, four determinations concerned registration of 
individuals pursuant to a general license authorizing travel to Libya 
for the sole purpose of visiting close family members.
    FAC has participated actively on the Operating Committee of the 
Department of Commerce to coordinate review by State, Defense, Energy, 
and Commerce of certain reexport applications, including those where 
Libya is the new destination for goods. In addition to providing 
guidance on such reexport applications, FAC has identified attempted 
illegal transactions involving exportation of parts to Libyan SDNs and 
continues to work closely with the Department of Commerce to assure 
compliance with the Regulations.
    3. Various enforcement actions mentioned in previous reports 
continue to be pursued, and several new investigations of possibly 
significant violations of the Libyan sanctions were initiated. As a 
result of such initiatives, the amount of Government of Libya assets 
blocked in U.S. banking institutions has risen to more than 
$818,218,440.
    During the current reporting period, substantial monetary penalties 
were assessed against U.S. firms for engaging in prohibited transactions 
with Libya. Since my last report, FAC has collected nearly $560,000 in 
civil penalties for violations of U.S. sanctions against Libya. The 
majority of the violations involved banks' failure to block funds 
transfers to Libyan-owned or -controlled banks.
    Due to aggressive enforcement efforts and increased public 
awareness, FAC has received numerous voluntary disclosures from U.S. 
firms concerning their sanctions violations. Many of these reports 
continue to be triggered by the periodic amendments to the Regulations 
listing additional organizations and individuals determined to be 
Specially Designated Nationals (``SDNs'') of Libya. For purposes of the 
Regulations, all dealings with the organizations and individuals listed 
will be considered dealings with the Government of Libya. All unlicensed 
transactions with these persons, or in property in which they have an 
interest, are prohibited. The listing of Libyan SDNs is not static and 
will be augmented from time to time as additional organizations or 
individuals owned or controlled by, or acting on behalf of, the 
Government of Libya are identified.
    In March 1992, FAC announced a new law enforcement initiative, 
Operation Roadblock, which targets U.S. travellers who violate the U.S. 
sanctions on Libya. Under this initiative, FAC has issued more than 100 
warning letters and demands for information to persons believed to have 
travelled to and worked in Libya, or made travel-related payments to 
Libya in violation of U.S. law. FAC's investigation of suspected 
violations is ongoing, assisted by an interagency task force including 
the Departments of State and Justice, the Treasury Department's 
Financial Crimes Enforcement Network (FinCEN), the Federal Bureau of 
Investigation, and the U.S. Customs Service.
    4. The expenses incurred by the Federal Government in the 6-month 
period from June 15 through December 15, 1992, that are directly 
attributable to the exercise of powers and authorities conferred by the 
declaration of the Libyan national emergency are estimated at 
approximately $1.8 million. Personnel costs were largely centered in the 
Department of the Treasury (particularly in the Office of Foreign Assets 
Control, the Office of the General Counsel, and the U.S. Customs 
Service), the Department of State, and the Department of Commerce.
    5. The policies and actions of the Government of Libya continue to 
pose an unusual and extraordinary threat to the national security and 
foreign policy of the United States. I shall continue to exercise the 
powers at my disposal to apply economic

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sanctions against Libya fully and effectively, so long as those measures 
are appropriate, and will continue to report periodically to the 
Congress on significant developments as required by law.
    Sincerely,

                                                             George Bush

                    Note: Identical letters were sent to Thomas S. 
                        Foley, Speaker of the House of Representatives, 
                        and Dan Quayle, President of the Senate.