INTRODUCTION - The Libyan Sanctions Regulations, authorized under the International Emergency Economic Powers Act and the International Security and Development Cooperation Act of 1985, established economic sanctions against Libya in January 1986. Citing terrorist attacks against the Rome and Vienna airports in December 1985, former President Reagan emphasized that he had authorized the sanctions in response to Libya’s repeated use and support of terrorism against the United States, other countries, and innocent persons.

The Regulations are still in force and affect all U.S. citizens and permanent residents wherever they are located, all people and organizations physically in the United States, and all branches of U.S. organizations throughout the world. They are adminis-tered by the U.S. Treasury Department’s Office of Foreign Assets Control. Criminal penalties for violating the sanctions range up to 10 years in prison, $500,000 in corporate and $250,000 in indi-vidual fines. In addition, civil penalties of up to $11,000 per violation may be imposed administratively.

This fact sheet is a broad overview of the Libyan Sanctions

Regulations

BUYING FROM LIBYA - Goods or services of Libyan origin may not be imported into the United States either directly or through third countries. There are two exceptions: (1) Libyan merchandise up to $100 in value in non-commercial quantities may be brought into the United States either for strictly personal use as accompanied baggage by an authorized traveler or sent as a gift to a person in the United States and (2) qualifying informational material may be imported without restriction.

SELLING TO LIBYA - Except for informational materials, such as books, magazines, films, and recordings and donated articles such as food, clothing, medicine, and medical supplies intended to relieve human suffering, no goods, technology, or services may be exported from the United States to Libya, either directly or through third countries. No U.S. bank or foreign branch of a U.S. bank may finance, or arrange offshore financ-ing for, third-country trade transactions where Libya is known to have an interest in the trade as its ultimate beneficiary.
The U.S. Treasury Department takes the view that arranging transactions which ultimately benefit Libya (for example, brokering third-country sales of Libyan crude oil or transportation for Libyan cargo) constitutes an exportation of brokerage services to Libya and a dealing in Libyan governmental property in violation of the Regulations. Banks should be careful, for example, not to become involved in transactions relating to shipments to or from South Korea involving ultimate delivery of merchandise to the Great Man-Made River Project in Libya.

The only areas of trade that may involve Libya and still be permissible are: (1) the sale of parts and components to third countries, where the U.S. goods will be “substantially transformed” into new and different articles of commerce prior to shipment to Libya, and (2) the sale of goods which come to rest in the inventory of a third-country distributor whose sales are not predominantly to Libya.
Even the first of those exceptions is not available if the finished product of the third country is destined for use in any aspect of the Libyan petroleum or petrochemical industries.

SPECIALLY DESIGNATED NATIONALS - Individuals or organizations who act on behalf of the Government of Libya anywhere in the world are considered by the U.S. Treasury Department to be “Specially Designated Nationals” of Libya.

Their names are published in the Federal Register, an official publication of the U.S. Government. A listing of such Specially Designated Nationals may be obtained by calling the Office of Foreign Assets Control at 202/622-2420. The listing, however, is a partial one and any U.S. individual or organization engaging in transactions with foreign nationals must take reasonable care to make certain that such foreign nationals are not acting on behalf of Libya.
The list includes certain banks domiciled in Europe and Africa as well as the names of individuals who are officers and directors of substantial international corporations. U.S. individuals or organizations who violate the Regulations by transacting business with Specially Designated Nationals of Libya may be subject to civil or criminal prosecution.

FINANCIAL DEALINGS WITH LIBYA - On January 8, 1986, the President blocked all Government of Libya assets in the United States or in the possession or control of U.S. persons anywhere in the world. This action prohibits all transfers of Libyan governmental assets without a specific license from the Office of Foreign Assets Control. All contracts, loans, and financial dealings with Libya are prohibited. The freeze covers all properties of the Libyan Government, and of entities owned or controlled by it, including all Libyan-organized and Libyan-owned or controlled banks (all banks in Libya are considered Government-controlled) and includes deposits held in banks in the United States and in U.S. banks’ overseas branches.

The prohibition against any transfer of property or interest in the property of Libya includes property that is now or in the future is located in the United States or is in or comes into the possession or control of U.S. persons. Any unlicensed funds transfer involving a direct or indirect interest of the Government of Libya (including any transfer routed through or to Libyan banks, all of which are considered to be Specially Designated Nationals of Libya), for which banks subject to U.S. jurisdiction receive instructions, must be deposited into a blocked account on the books of the bank receiving the instructions. Such funds may not be returned to a remitter without a specific license from the Office of Foreign Assets Control.

No unlicensed debits may be made to blocked Libyan accounts to pay obligations of U.S. or other persons, whether the obligations arose before or after the sanctions against Libya were imposed. Even payments from blocked accounts for goods, services, or technology exported prior to the sanctions program are prohibited.

CONTRACTS BENEFITING LIBYA - No U.S. person may perform any contract in support of an industrial or other commercial or governmental project in Libya. The prohibition includes sales or service agreements with non-Libyan persons located anywhere in the world, if it is known that Libya or a Libyan project will benefit from the transaction. Banks subject to U.S. jurisdiction must exercise extreme caution not to operate accounts for even non-U.S. companies which use those accounts for transactions connected with Libyan projects or commercial activities. Any such accounts must be blocked under U.S. law.

TRANSACTIONS INVOLVING U.S. SUBSIDIARIES - Independent transactions with Libya by foreign subsidiaries of U.S. firms are permitted if no U.S. person or permanent resident has a role. It should be emphasized that the facilitating actions of the U.S. parent, or of U.S. citizens (wherever resident) who manage or work for the subsidiary, are fully subject to the prohibitions of the Regulations.

STANDBY LETTERS OF CREDIT - A number of companies were required to open bid, performance, advance payment, or warranty bonds in the form of standby letters of credit to do business with Libya before the Libyan sanctions were imposed. Special procedures have been established with regard to payment demands under standby letters of credit in favor of Libya. Banks must “give prompt notice” to the party who opened the letter of credit (the account party) when there is an attempted drawing.
The account party then has five days to apply to the Office of Foreign Assets Control for a specific license to prevent “payment” of the letter of credit into a blocked account. A bank may not make any payment, even into a blocked account, on behalf of a Libyan beneficiary unless the account party fails to secure a Treasury license within 10 business days of notification from the bank.
If the account party receives a license from the Treasury Depart-ment, the original of the license should be presented to the bank and a special blocked reserve account must be established on the account party’s corporate books to reflect its outstanding obligation to Libya in lieu of the bank “paying” the letter of credit.

The account party must certify to the Treasury Department that it has established the blocked reserve account. Neither the bank nor the account party are relieved from giving any notice of defense against payment or reimbursement that is required by applicable law. Moreover, the issuing bank must continue to maintain the letter of credit as a contingent liability on its own books, despite any reserve account established by the account party and, in the event the embargo is lifted, both the bank and the account party will be expected to negotiate concerning their outstanding obligation.

TRAVEL TO LIBYA - All transportation-related transactions involving Libya by U.S. persons are prohibited, including the sale in the United States of any transportation by air which includes any stop in Libya. All travel-related transactions are prohibited for U.S. citizens or residents with regard to Libya, except for (1) travel by close family members of Libyan nationals when the U.S. citizen or resident has registered with Treasury’s Office of Foreign Assets Control or with the Embassy of Belgium in Tripoli, or (2) travel by journalists regularly employed in such capacity by a newsgathering organization.

If you have information regarding possible violations of any of these regulations, please call the Treasury Department’s Office of Foreign Assets Control at 202/622-2430. Your call will be handled confidentially.

The Office also administers sanctions programs involving Iraq, the Federal Republic of Yugoslavia (Serbia and Montengro), North Korea, Cuba, the National Union for the Total Independence of Angola (UNITA), Iran, Syria, Sudan, Burma (Myanmar), Terrorists who threaten to disrupt the Middle East peace process, and international Narcotics Traffickers.

For additional information about these programs or about the Libyan Sanctions Regulations, please contact the:

OFFICE OF FOREIGN ASSETS CONTROL
U.S. Department of the Treasury
Washington, D.C. 20220
202/622-2520