On July 10, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published a final rule to formally create a new Venezuela sanctions program. The new Venezuela Sanctions Regulations implement the Venezuela Defense of Human Rights and Civil Society Act of 2014 (the “Act”) and Executive Order 13692 of March 8, 2015 (“EO 13692”). For further information regarding the Act and EO 13692, please see our previous alert. OFAC’s new Venezuela sanctions program targets persons responsible for significant acts of violence or serious human rights abuses against antigovernment protestors in Venezuela, persons suppressing the right to exercise freedom of expression or assembly within Venezuela, and public corruption by Venezuelan government officials. The Venezuela Sanctions Regulations are being published in an abbreviated form in order to provide immediate guidance to the public. However, OFAC has indicated that it intends to publish a more comprehensive set of sanctions regulations related to Venezuela at a later date. The current regulations are effective immediately.
The Venezuela sanctions program is a list-based “blocking” regime that targets only designated individuals and entities. It does not create an economic embargo or comprehensive sanctions regime. The prohibited transactions described in the Venezuela Sanctions Regulations are currently limited to the prohibitions described in EO 13692. EO 13692 targets and subjects to an asset freeze persons determined by the United States:
- to be responsible for or complicit in, or responsible for ordering, controlling, or otherwise directing, or to have participated in the following in or in relation to Venezuela:
- actions or policies that undermine democratic processes or institutions;
- significant acts of violence or conduct that constitute a serious abuse or violation of human rights, including during antigovernment protests since February 2014;
- actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or
- public corruption by senior Venezuelan government officials;
- to be a current or former leader of an entity that has, or whose members have, engaged in any activity described in (i), or of an entity blocked under this EO 13692;
- to be a current or former Venezuelan government official;
- to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity described in (i) or of an entity blocked under EO 13692; or
- to be owned or controlled by, or acting on behalf of, any person blocked under EO 13692.
In addition to authorizing an asset freeze on such designated persons, EO 13692 also suspends entry into the United States, as immigrants or non-immigrants, of individuals meeting the criteria for the blocking sanctions.
In March of 2015, President Obama designated seven individuals under EO 13692 who are current or former officials in the Venezuelan military, police, or intelligence service. Of note, no additional persons have been designated under the Venezuela sanctions program since March.
The sanctions regulations build upon export control and visa restrictions imposed on Venezuela in 2014, as we previously reported. Since the Act was signed into law by President Obama in late 2014, the Obama administration has only designated a small number of persons under the Act and EO 13692. However, companies operating in Venezuela should ensure that they are conducting restricted party list screening and conducting due diligence to confirm that no counterparty is owned or controlled by any person that is subject to sanctions under the Venezuela sanctions program. In addition, companies should exercise caution when conducting dealings with the Government of Venezuela, entities owned or controlled by the Government of Venezuela, and Venezuelan government officials, as such persons may be targets of future sanctions.