The U.S. Department of the Treasury's (Treasury) Office of Foreign Assets Control (OFAC) has designated five officials affiliated with the regime of Nicolas Maduro pursuant to Executive Order 13850 (E.O. 13850) for allegedly continuing to repress democracy and democratic actors in Venezuela and engaging in significant corruption and fraud against the people of Venezuela. These designations, announced on Feb. 15, 2019, target members of Maduro's inner circle, security and intelligence forces, as well as the current Venezuelan petroleum minister and president of state-owned petroleum company Petroleos de Venezuela, S.A. (PdVSA).
These actions follow the designation of PdVSA on Jan. 28, 2019, and reinforce previous efforts by the U.S. Departments of Treasury and State to characterize Maduro's regime as "illegitimate" and certify the authority of Venezuela's Interim President Juan Guaido. (See Holland & Knight alert, "OFAC Designates Petroleos de Venezuela S.A.; U.S. Expands Sanctions on Venezuelan Government," Jan. 30, 2019.)
The designated individuals, include:
The rationale described by OFAC for the designations suggests the individuals were designated for, among other things, being "aligned" with Maduro and for prior actions involving alleged human rights abuses or corrupt practices. Also worth noting is that some of the designated individuals had replaced prior Venezuelan government officials that had been designated under previous executive orders, including E.O. 13692.
In its press release regarding these designations, the Treasury stated that:
"U.S. sanctions need not be permanent; sanctions are intended to bring about a positive change of behavior. The United States has made clear that we will consider lifting sanctions for persons designated under E.O. 13692 or E.O. 13850 who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the government, and combat corruption in Venezuela." (emphasis added)
Although significant uncertainty remains, Treasury's statements suggest that a policy reversal for Venezuela could be on the horizon should consensus be reached by Venezuelan government officials (including members of the Maduro regime) in the recognition of Interim President Guaido's administration.
These designations effectively block all of the property and interests in property of the designated individuals to the extent that they come within the possession or control of any United States person (including U.S. financial institutions).
On Feb. 11, 2019, OFAC issued General License 3C, "Authorizing Transactions Related to, Provisions of Financing for, and Other Dealings in Certain Bonds," and General License 9B, "Authorizing Transactions Related to Dealings in Certain Securities." Additionally, OFAC revised frequently asked questions (FAQs) 650, 661 and 662.
For further assistance or answers to questions related to these matters, please contact the authors.
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