In a show of support for Venezuelan Interim President Juan Guaidó last week, and in opposition to the Maduro regime, President Trump issued Executive Order 13884, which imposes blocking sanctions on the Government of Venezuela and sets out new secondary sanctions triggers capturing certain persons who engage in dealings with persons sanctioned pursuant to the Executive Order. This action builds on other restrictions the Administration has imposed on Venezuelan persons and the Venezuelan Government, including the designation as an SDN of the Venezuelan state-owned oil and gas company Petróleos de Venezuela, S.A. (PdVSA) earlier this year.
The Executive Order does not impose comprehensive sanctions against Venezuela, and it does not prohibit all transactions involving Venezuela. The Executive Order does, however, ratchet up the sanctions against the Maduro regime in Venezuela by imposing blocking requirements on all property and property interests of the Government of Venezuela and prohibiting US persons from engaging in transactions with or activities involving the Government of Venezuela (including state-owned enterprises).
The Executive Order defines “Government of Venezuela” to include the state and Government of Venezuela, as well as:
- Any political subdivision, agency or instrumentality of the state and Government of Venezuela;
- Any person directly or indirectly owned by the state and Government of Venezuela or any political subdivision, agency or instrumentality thereof;
- Any person directly or indirectly controlled by the state and Government of Venezuela or any political subdivision, agency or instrumentality thereof; and
- Any person who has acted or purported to act, directly or indirectly, for or on behalf of any of the above, including as a member of the Maduro regime.
The blocking requirements and prohibitions apply to persons meeting any of the above criteria.
Excluded from the prohibitions are (i) transactions by employees, grantees or contractors of the US Federal Government for official Federal Government business, and (ii) transactions related to the provision of food, clothing, or medicine used to relieve human suffering.
In connection with this action, the US Office of Foreign Assets Control (OFAC) has amended or issued a number of general licenses authorizing certain activities in Venezuela or involving its government. Notably, General License No. 28 authorizes, through September 4, 2019, all transactions and activities prohibited by the Executive Order that are ordinarily incident and necessary to the wind down of operations, contracts or other agreements involving the Government of Venezuela that were in effect prior to August 5th. Other newly issued general licenses cover, in part, activities involving the Venezuelan National Assembly or Interim President Guaidó and transactions related to intellectual property, telecommunications and mail, internet communications, and port, airport, and flight operations. OFAC has also released guidance regarding the provision of humanitarian assistance to the people of Venezuela following the imposition of the new sanctions.
In addition to blocking the Government of Venezuela, the Executive Order also authorizes the Secretary of the Treasury to impose blocking sanctions on parties determined to:
- Have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person included on the SDN List in connection with the Executive Order; and
- Be owned or controlled by, 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.
Given these new sanctions, it is important to update policies and procedures related to restricted party screening to ensure that additional diligence is conducted on current and prospective business partners, customers, suppliers, and other parties to identify any connections to the Government of Venezuela. This should include screening to identify entities that fall within the definition of “Government of Venezuela,” as such entities are blocked even if they are not specifically identified on the SDN List, as well as entities that are owned 50 percent or more by the Government of Venezuela. Organizations may also wish to conduct diligence to identify parties with connections to Venezuela or the Venezuelan Government that are not blocked as a matter of law but which may be at a higher risk for future designation by OFAC so that steps can be taken to address such risks.