Ofac Expands Its Venezuela-Related Sanctions
On August 5, 2019, President Donald Trump issued Executive Order 13884 blocking all property or interest in property of the Government of Venezuela within or transiting U.S. jurisdiction (the “E.O.”). While this is not the first time that the U.S. Government imposes economic sanctions on the Government of Venezuela, previous sanctions restricted operations involving certain debt or assets of that Government, or individuals and entities listed on the Specially Designated Nationals and Blocked Persons list (“SDN List”). With the E.O., if they are not authorized by the Office of Foreign Assets Control (“OFAC”), U.S. persons are prohibited from engaging in all transactions with persons meeting the definition of the “Government of Venezuela” or entities in which they have, directly or indirectly, 50% or greater ownership interest regardless of whether the person appears on the SDN List.
Under the E.O., the term ‘‘Government of Venezuela’’ includes the State and Government of Venezuela, any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela and Petroleos de Venezuela, S.A. (PDVSA), any person owned or controlled by the foregoing, and any person who has acted or purported to act for or on behalf of, any of the foregoing.
The E.O. also authorizes OFAC to include in its SDN List any person that is determined, in consultation with the Secretary of State, to (i) have materially assisted, sponsored, or provided support to the Government of Venezuela; (ii) be owned or controlled by, or to have acted or purported to act for on behalf of, the Government of Venezuela. Accordingly, persons who engage in any type of transaction with the Government of Venezuela risk facing OFAC Sanctions. Previously, a person would be subject to this risk only if the transaction with the Government of Venezuela was tied to corruption, human right abuses, or other illegal activities.
On the same date, OFAC amended its General Licenses 2A, 3F, 4C, 7C, 8C, 9E, 10A, 13C, 15B, 16B, 18A, 20A, to clarify that these licenses do not exempt transactions prohibited by the E.O different from the ones that are directly mentioned by OFAC’s General Licenses. OFAC also issued General Licenses 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, and its “Guidance Related to the Provision of Humanitarian Assistance and Support to the Venezuelan People,” to prevent the E.O. from having unintended consequences on that country.
Specifically, OFAC’s new regulations clarify that OFAC Sanctions on the Government of Venezuela do not prohibit U.S. persons from engaging in transactions involving the country or people of Venezuela, provided blocked persons or proscribed conduct are not involved. Additionally, OFAC’
s new regulations authorize U.S. persons to continue to provide humanitarian support to the Venezuelan people, including transactions through the U.S. financial system for certain authorized activity related to food, agricultural commodities, medicine, and medical devices; non-commercial, personal remittances; international organizations; telecommunications and mail; the Internet; medical services; and nongovernmental organizations. OFAC’s new regulations also authorize transactions with Juan Guaidó, the National Assembly, and individuals appointed or designated by Guaidó.