[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR550.417]



[Page 283]

 

                  TITLE 31--MONEY AND FINANCE: TREASURY

 

 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY

 

PART 550_LIBYAN SANCTIONS REGULATIONS--Table of Contents

 

                        Subpart D_Interpretations

 

Sec. 550.417  Letters of credit.



    (a) Question. Prior to 4:10 p.m. e.s.t., January 8, 1986, a bank 

that is a U.S. person has issued or confirmed a documentary letter of 

credit for the Government of Libya as account party in favor of a U.S. 

person. The bank does not hold funds for the Government of Libya out of 

which it could reimburse itself for payment under the letter of credit. 

The U.S. person presents documentary drafts for exports to Libya made 

after 4:10 p.m. e.s.t., January 8, 1986. May the bank pay the U.S. 

exporter against the drafts?

    Answer. No. Such a payment is prohibited by Sec. Sec. 550.206 and 

550.209, as an extension of credit to the Government of Libya and a 

transfer of property in which there is an interest of the Government of 

Libya.

    (b) Question. On the same facts as in paragraph (a), the bank holds 

deposits for the Government of Libya. May it pay on the letter of credit 

and debit the blocked funds for reimbursement?

    Answer. No. A debit to a blocked account is prohibited by Sec. 

550.209 except as licensed.

    (c) Question. On the same facts as in paragraph (a), the Government 

of Libya, after 4:10 p.m. e.s.t., January 8, 1986, transfers funds to 

the bank to collateralize the letter of credit for purposes of honoring 

the obligation to the U.S. exporter. Is the transfer authorized and may 

the bank pay against the draft?

    Answer. Yes. In accordance with Sec. 550.515, the transfer by the 

Government of Libya to the bank is licensed. The funds are not blocked 

and the bank is authorized to pay under the letter of credit and 

reimburse itself from the funds.

    (d) Question. Prior to 4:10 p.m. e.s.t., January 8, 1986, a foreign 

bank confirms a documentary letter of credit issued by its U.S. agency 

or branch for a non-Libyan account party in favor of a Libyan entity. 

Can the U.S. agency or branch of the foreign bank transfer funds to that 

foreign bank in connection with that foreign bank's payment under the 

letter of credit?

    Answer. No, the payment of the U.S. agency or branch is blocked, 

unless the foreign bank made payment to the Libyan entity prior to 4:10 

p.m. e.s.t., January 8, 1986.



[51 FR 2465, Jan. 16, 1986]