diff --git a/src/cpp/ripple/AccountSetTransactor.cpp b/src/cpp/ripple/AccountSetTransactor.cpp
index 9ffa635e50..4e8c138345 100644
--- a/src/cpp/ripple/AccountSetTransactor.cpp
+++ b/src/cpp/ripple/AccountSetTransactor.cpp
@@ -44,7 +44,7 @@ TER AccountSetTransactor::doApply()
 		uFlagsOut	|= lsfRequireAuth;
 	}
 
-	if (uTxFlags & tfOptionalAuth)
+	if ((uTxFlags & tfOptionalAuth) && isSetBit(uFlagsIn, lsfRequireAuth))
 	{
 		cLog(lsINFO) << "AccountSet: Clear RequireAuth.";
 
@@ -62,16 +62,16 @@ TER AccountSetTransactor::doApply()
 		return temINVALID_FLAG;
 	}
 
-	if (uTxFlags & tfRequireDestTag)
+	if ((uTxFlags & tfOptionalDestTag) && !isSetBit(uFlagsIn, lsfRequireDestTag))
 	{
-		cLog(lsINFO) << "AccountSet: Set RequireDestTag.";
+		cLog(lsINFO) << "AccountSet: Set lsfRequireDestTag.";
 
 		uFlagsOut	|= lsfRequireDestTag;
 	}
 
-	if (uTxFlags & tfOptionalDestTag)
+	if ((uTxFlags & tfOptionalDestTag) && isSetBit(uFlagsIn, lsfRequireDestTag))
 	{
-		cLog(lsINFO) << "AccountSet: Clear RequireDestTag.";
+		cLog(lsINFO) << "AccountSet: Clear lsfRequireDestTag.";
 
 		uFlagsOut	&= ~lsfRequireDestTag;
 	}
@@ -79,6 +79,31 @@ TER AccountSetTransactor::doApply()
 	if (uFlagsIn != uFlagsOut)
 		mTxnAccount->setFieldU32(sfFlags, uFlagsOut);
 
+	//
+	// DisallowXRP
+	//
+
+	if ((tfDisallowXRP|tfAllowXRP) == (uTxFlags & (tfDisallowXRP|tfAllowXRP)))
+	{
+		cLog(lsINFO) << "AccountSet: Malformed transaction: Contradictory flags set.";
+
+		return temINVALID_FLAG;
+	}
+
+	if ((uTxFlags & tfDisallowXRP) && !isSetBit(uFlagsIn, lsfDisallowXRP))
+	{
+		cLog(lsINFO) << "AccountSet: Set lsfDisallowXRP.";
+
+		uFlagsOut	|= lsfDisallowXRP;
+	}
+
+	if ((uTxFlags & tfAllowXRP) && isSetBit(uFlagsIn, lsfDisallowXRP))
+	{
+		cLog(lsINFO) << "AccountSet: Clear lsfDisallowXRP.";
+
+		uFlagsOut	&= ~lsfDisallowXRP;
+	}
+
 	//
 	// EmailHash
 	//
diff --git a/src/cpp/ripple/LedgerFormats.h b/src/cpp/ripple/LedgerFormats.h
index 537f3f1934..f9f0a737bb 100644
--- a/src/cpp/ripple/LedgerFormats.h
+++ b/src/cpp/ripple/LedgerFormats.h
@@ -42,6 +42,7 @@ enum LedgerSpecificFlags
 	lsfPasswordSpent	= 0x00010000,	// True, if password set fee is spent.
 	lsfRequireDestTag	= 0x00020000,	// True, to require a DestinationTag for payments.
 	lsfRequireAuth		= 0x00040000,	// True, to require a authorization to hold IOUs.
+	lsfDisallowXRP		= 0x00080000,	// True, to disallow sending XRP.
 
 	// ltOFFER
 	lsfPassive			= 0x00010000,
diff --git a/src/cpp/ripple/TransactionFormats.h b/src/cpp/ripple/TransactionFormats.h
index 7b285c73d7..b7a5d079b6 100644
--- a/src/cpp/ripple/TransactionFormats.h
+++ b/src/cpp/ripple/TransactionFormats.h
@@ -64,7 +64,11 @@ const uint32 tfRequireDestTag		= 0x00010000;
 const uint32 tfOptionalDestTag		= 0x00020000;
 const uint32 tfRequireAuth			= 0x00040000;
 const uint32 tfOptionalAuth			= 0x00080000;
-const uint32 tfAccountSetMask		= ~(tfRequireDestTag|tfOptionalDestTag|tfRequireAuth|tfOptionalAuth);
+const uint32 tfDisallowXRP			= 0x00100000;
+const uint32 tfAllowXRP				= 0x00200000;
+const uint32 tfAccountSetMask		= ~(tfRequireDestTag|tfOptionalDestTag
+										|tfRequireAuth|tfOptionalAuth
+										|tfDisallowXRP|tfAllowXRP);
 
 // OfferCreate flags:
 const uint32 tfPassive				= 0x00010000;