31 C.F.R. Subpart D—Interpretations
Title 31 - Money and Finance: Treasury
Reference to any section of this chapter or to any regulation, ruling, order, instruction, direction or license issued pursuant to this chapter shall be deemed to refer to the same as currently amended unless otherwise so specified. Any amendment, modification, or revocation of any section of this chapter or of any order, regulation, ruling, instruction, or license issued by or under the direction of the Secretary of the Treasury pursuant to section 3(a) or 5(b) of the Trading With the Enemy Act, as amended, shall not unless otherwise specifically provided be deemed to affect any act done or omitted to be done, or any suit or proceeding had or commenced in any civil or criminal case, prior to such amendment, modification, or revocation, and all penalties, forfeitures, and liabilities under any such section, order, regulation, ruling, instruction or license shall continue and may be enforced as if such amendment, modification, or revocation had not been made. (a) Except as provided in §500.525, whenever a transaction licensed or authorized by or pursuant to this chapter results in the transfer of property (including any property interest) away from a designated national, such property shall no longer be deemed to be property in which a designated national has or has had an interest unless there exists in such property an interest of a designated national, the transfer of which has not been effected pursuant to license or other authorization. (b) Unless otherwise specifically provided in a license or authorization contained in or issued pursuant to this chapter, if property (including any property interest) is transferred to a designated national such property shall be deemed to be property in which there exists the interest of a designated national. A transaction between any person within the United States and any principal, agent, home office, branch, or correspondent, outside the United States of such person is a transaction prohibited by §500.201 to the same extent as if the parties to the transaction were in no way affiliated or associated with each other. Section 500.201 prohibits the exportation of securities, currency, checks, drafts and promissory notes to designated foreign countries. Section 500.201 prohibits the presentation, acceptance or payment of: (a) Drafts or other orders for payment drawn under irrevocable letters of credit issued in favor or on behalf of any designated national; (b) Drafts or other orders for payment, in which any designated national has on or since the “effective date” had any interest, drawn under any irrevocable letter of credit; and (c) Documentary drafts in which any designated national has on or since the “effective date” had any interest. Section 500.201 prohibits all transactions incident to the administration of the blocked estate of a decedent, including the appointment and qualification of personal representatives, the collection and liquidation of assets, the payment of claims, and distribution to beneficiaries. Attention is directed to §500.523 which authorizes certain transactions in connection with the administration of blocked estates of decedents and §500.568 which authorizes the unblocking by specific license of estate assets to certain heirs under certain circumstances. [15 FR 9040, Dec. 19, 1950, as amended at 54 FR 5231, Feb. 2, 1989] Section 500.201 prohibits access to any safe deposit box within the United States in the custody of any designated national or containing any property in which any designated national has any interest or which there is reasonable cause to believe contains property in which any such designated national has any interest. Attention is directed to §500.517 which authorizes access to such safe deposit boxes under certain conditions. Section 500.201 prohibits any request or authorization made by or on behalf of a bank or other person within the United States to a bank or other person outside of the United States as a result of which request or authorization such latter bank or person makes a payment or transfer of credit either directly or indirectly to a designated national. [18 FR 2080, Apr. 14, 1953] Currency, coins, and postage and other stamps issued by North Korea, North Viet-Nam, Cambodia, or South Viet-Nam are merchandise of North Korean, North Vietnamese, Cambodian, or South Vietnamese origin subject to §500.204(a)(1). [41 FR 16554, Apr. 20, 1976] Section 500.204 prohibits the unlicensed importation into the United States of commodities of North Korean, North Vietnamese, Cambodian, or South Vietnamese origin. It also prohibits, unless licensed, persons subject to the jurisdiction of the United States from purchasing, transporting or otherwise dealing with such commodities which are outside the United States. [41 FR 16554, Apr. 20, 1976] A commodity subject to §500.204 remains subject howsoever it has been processed. It should not be assumed that a commodity which has undergone operations other than those listed in §500.204(a)(1), has become a manufactured form of the commodity rather than a processed form thereof. In case of question, a ruling should be requested from the Office of Foreign Assets Control. Requests for rulings in the form of license applications or otherwise should include adequate technical detail. It should be noted that it is quite possible for merchandise to have North Korea, North Viet-Nam, Cambodia, or South Viet-Nam as its “country of origin” for Foreign Assets Control purposes while having some other country as its “country of origin” for marking or statistical purposes. [41 FR 16554, Apr. 20, 1976] The following examples illustrate the scope of the authorization in §500.576 for dealings in property in which Vietnam or a Vietnamese national has an interest with respect to development projects in Vietnam formally proposed or approved for execution, funding or sponsorship by a qualified international institution listed in appendix A to this part (“Qualified Projects”). Example # 1: The Government of Vietnam (“Vietnam”) approaches a U.S. financial consulting firm (the “U.S. Consulting Firm”) for advice on building cement plants in Hanoi and Ho Chi Minh City. The project might be eligible for funding by the Asian Development Bank (the “ADB”), and Vietnam wants the U.S. Consulting Firm's assistance in conducting a feasibility study for submission to the ADB. Since the project has not yet been formally proposed or approved for funding by the ADB, no involvement of the U.S. Consulting Firm is authorized pursuant to §500.576. However, had the ADB formally proposed the project in its monthly ADB Business Opportunities as a project being considered for funding, or had it funded the feasibility study, §500.576 would authorize the U.S. Consulting Firm's transactions. Example # 2: Upon ADB approval of funding for the cement plant project, a U.S. company (the “U.S. Company”) forms a joint venture with a Vietnamese company to bid on construction of the cement plants in Hanoi and Ho Chi Minh City. The joint venture's bid is successful, and it purchases construction equipment from the United States, financed by a U.S. bank and insured by a U.S. company. Several items are sourced from the United States during construction, including cement equipment, which is covered by a ten-year service and maintenance agreement. The joint venture agreement calls for the continued management and operation of the plants by the U.S. Company after completion, and for the insurance of the plants by a U.S. insurance company. Each of these transactions with respect to the Qualified Project is authorized by §500.576. Example # 3: The International Finance Corporation (“IFC”) offers equity investment in a Vietnamese company to finance environmental safeguards for drilling operations in offshore oil fields. Various U.S. investors, including venture capital companies, brokerage firms, and investment banks contribute capital and receive shares in the Vietnamese company. This equity investment in a Qualified Project is authorized by §500.576. The U.S. companies purchasing these shares as part of the IFC-sponsored development project may hold or resell them, including resale to other persons subject to U.S. jurisdiction. Shares acquired by entities not subject to U.S. jurisdiction may not then be purchased or repurchased by a person subject to U.S. jurisdiction. Example # 4: (a) An Indonesian company (the “Contractor”) is a successful bidder on a Qualified Project, and hires a U.S. law firm to represent it in contract negotiations with Vietnam to build a fish processing and canning facility in Vietnam funded by the World Bank. The law firm may represent the Contractor throughout the course of the project pursuant to §500.576, once the project has been formally proposed or approved for funding by the World Bank. (b) Once the Qualified Project is underway, the Contractor purchases equipment manufactured in France by a French company. The long-term servicing of the equipment, however, will be provided by the French company's U.S. subsidiary. The service transactions are authorized pursuant to §500.576. (c) After the processing facility is completed, Vietnam hires a U.S. marketing firm to develop marketing strategies for the product worldwide. It further asks the marketing firm to execute the strategies it devises and to represent the product in South-East Asia, including the domestic market in Vietnam. The marketing firm in turn would hire the brokerage services of a U.S. citizen domiciled in Thailand for the sale of the product to that country. These transactions are outside the scope of §500.576, and violate §500.201, because they are not directly incident to the Qualified Project funded by the World Bank. [58 FR 68530, Dec. 28, 1993]
Title 31: Money and Finance: Treasury
PART 500—FOREIGN ASSETS CONTROL REGULATIONS
Subpart D—Interpretations
§ 500.401 Reference to amended sections.
§ 500.402 Effect of amendment of sections of this chapter or of other orders, etc.
§ 500.403 Termination and acquisition of the interest of a designated national.
§ 500.404 Transactions between principal and agent.
§ 500.405 Exportation of securities, etc. to designated foreign countries.
§ 500.406 Drafts under irrevocable letters of credit; documentary drafts.
§ 500.407 Administration of blocked estates of decedents.
§ 500.408 Access to certain safe deposit boxes prohibited.
§ 500.409 Certain payments to designated foreign countries and nationals through third countries.
§ 500.410 Currency, coins, and postage and other stamps.
§ 500.411 Dealings abroad in commodities subject to the Regulations.
§ 500.412 Process vs. manufacture.
§ 500.413 Participation in certain development projects in Vietnam.
