U.S. Imposes Comprehensive Sanctions Blocking Property of the Government of Venezuela
- President Donald Trump has issued an Executive Order expanding the current sanctions relating to Venezuela by blocking all property and interests in property of the government of Venezuela and the Nicolás Maduro regime.
- Concurrent with this action, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued various general licenses to authorize certain transactions and activities related to the Venezuelan National Assembly, interim President Juan Guaidó and humanitarian support for the Venezuelan people, among others.
- These actions are expected to impact not only the assets of the Government of Venezuela, but also any individuals or entities that engage in transactions with or for the benefit of the Government of Venezuela (i.e., secondary sanctions).
President Donald Trump on Aug. 5, 2019, issued an Executive Order that blocks all property and interests in property of the Government of Venezuela and the Nicolás Maduro regime. Although the Executive Order does not preclude U.S. persons from exporting or reexporting certain items to Venezuela as long as sanctioned individuals or entities or certain prohibited activities are not involved, it does effectively convert Venezuela into a jurisdiction whose government – which controls most of the South American nation's key industries – is the target of comprehensive sanctions. As such, most transactions or business dealings with the Government of Venezuela are prohibited, unless authorized by general or specific license.
The Executive Order defines the term "Government of Venezuela" to include "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, directly or indirectly, by the foregoing, and any person who has acted or purported to act directly for or on behalf of, any of the foregoing, including as a member of the Maduro regime." Of particular importance is the impact that this broad definition of Government of Venezuela has on current and former Venezuelan politically exposed persons (PEPs) and the application of these sanctions to such persons.
The Executive Order also authorizes the U.S. Secretary of the Treasury, in consultation with the U.S. Secretary of State, to impose sanctions on persons that have, among other things, materially assisted, sponsored or provided financial, material or technological support for, or goods or services to or in support of the Government of Venezuela and other persons included on the list of Specially Designated Nationals and Blocked Persons (SDN List) maintained by OFAC, or that have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Executive Order.
In some ways, this portion of the Executive Order resembles secondary sanctions in place in other sanctions programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) that threaten designation of persons that engage in significant transactions or dealings with sanctions targets. Prior Executive Orders concerning the situation in Venezuela (such as Executive Order 13692 issued on March 8, 2015, or Executive Order 13850 issued on Nov. 1, 2018) delegated similar authority to the Treasury Secretary, but the activities that would subject a person to risk of secondary-sanctions designation under those orders were more specific and tied to certain activities (e.g., actions or policies that undermine democratic processes or institutions; significant acts of violence or conduct that constitutes a serious abuse or violation of human rights; actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or public corruption by senior officials within the Government of Venezuela). The latest Executive Order extends this authority to the Treasury Secretary and threatens possible designation for persons that engage in significant transactions or dealings with the Government of Venezuela.
The Executive Order also prohibits:
- any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to the Executive Order (including the Government of Venezuela)
- the receipt of any contribution or provision of funds, goods, or services from any such persons
- any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in the Executive Order
Concurrent with this action, the OFAC issued various general licenses to authorize certain transactions and activities related to the Venezuela National Assembly, interim President Juan Guaidó and humanitarian support for the Venezuelan people, among others.
Restrictions on Immigration
The Executive Order also suspends (subject to certain exceptions) the unrestricted immigrant and nonimmigrant entry into the United States of aliens determined to have, among other things, "materially assisted, sponsored, or provided financial, material, or technological support" for the Government of Venezuela or any other person included on the SDN List maintained by OFAC, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Executive Order.
Concurrent with the issuance of the Executive Order, OFAC amended certain Venezuela-related general licenses, including General Licenses 2A, 3F, 4C, 7C, 8C, 9E, 10A, 13C, 15B, 16B, 18A and 20A, which supersede and replace the prior corresponding general licenses. Further, OFAC issued the following new Venezuela-related general licenses:
- General License 21: "Entries in Certain Accounts for Normal Service Charges and Payments and Transfers to Blocked Accounts in U.S. Financial Institutions Authorized"
- General License 22: "Venezuela's Mission to the United Nations"
- General License 23: "Third-country Diplomatic and Consular Funds Transfers Authorized"
- General License 24: "Certain Transactions Involving the Government of Venezuela Related to Telecommunications and Mail Authorized"
- General License 25: "Exportation of Certain Services, Software, Hardware, and Technology Incident to the Exchange of Communications over the Internet Authorized"
- General License 26: "Emergency and Certain Other Medical Services Authorized"
- General License 27: "Certain Transactions Related to Patents, Trademarks, and Copyrights Authorized"
- General License 28: "Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts Involving the Government of Venezuela"
- General License 29: "Certain Transactions Involving the Government of Venezuela in Support of Certain Nongovernmental Organizations' Activities Authorized"
- General License 30: "Authorizing Certain Transactions Involving the Government of Venezuela Necessary to Port and Airport Operations"
- General License 31: "Certain Transactions Involving the Venezuelan National Assembly, the Interim President of Venezuela, and Certain Other Persons Authorized"
- General License 32: "Authorizing Certain Transactions Related to Personal Maintenance of Individuals Who Are U.S. Persons Residing in Venezuela"
- General License 33: "Authorizing Overflight Payments, Emergency Landings, and Air Ambulance Services"
Although some of these general licenses authorize certain transactions and activities within specific time frames, there is some uncertainty regarding their scope, application and interpretation, and some of the terms used therein. OFAC has issued frequently asked questions regarding the issuance of the new general licenses. For clarity, none of the newly issued general licenses should be read to expand the scope of previously issued general licenses. For example, General License 28 does not extend the authorization to wind-down periods that have expired for PdVSA, Central Bank of Venezuela or other blocked Government of Venezuela persons.
Humanitarian Assistance and Support to the Venezuelan People
Concurrent with the issuances of the general licenses, OFAC has issued further guidance related to the provision of humanitarian assistance and support to the Venezuelan people. OFAC has expressed that it is committed to ensure that humanitarian support can flow to the people of Venezuela, and that access to communications services critical to democracy is unfettered. To that end, OFAC has issued several authorizations to ensure that U.S. persons may continue to support the people of Venezuela.
According to the guidance, U.S. persons may continue to provide unimpeded humanitarian support to the Venezuelan people. To this end, OFAC has issued a number of general licenses (see above) designed to support assistance to the Venezuelan people. In addition to these general licenses, OFAC can also issue specific licenses to authorize particular transactions that may otherwise be prohibited by the sanctions, as long as those transactions are in the foreign policy interests of the United States.
For further assistance or answers to questions related to these matters, please contact the authors.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.