The United States has expanded the scope of its Nicaragua-related sanctions program by adding the Nicaraguan Vice President Rosaria Murillo, wife of President Daniel Ortega, and Ortega’s security advisor Nestor Moncada Lau, to the Specially Designated Nationals list.
On 27 November 2018, the President of the United States issued Executive Order 13851 blocking the property of certain persons contributing to the situation in Nicaragua. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) had previously sanctioned three high-ranking Nicaraguan officials on 5 July 2018 under the Global Magnitsky sanctions, a program targeting persons involved in serious human rights abuse and corruption.
As a result of the designations, the property and interests in property of Ms Murillo and Mr Moncada Lau that are in the United States or subsequently come within the United States or the control or possession of any U.S. person are to be blocked and U.S. persons are prohibited from transferring or otherwise dealing with such property or providing funds, goods or services. Both are also now subject to U.S. travel bans.
All U.S. Persons, including citizens, permanent resident aliens, entities organised under U.S. laws or any jurisdiction within the United States (including foreign branches) and any person physically in the United States must comply with these U.S. sanctions.
The designations follow a period of unrest in Nicaragua. The U.S. has expressed concerns that Nicaragua is heading down the path that led to conflict in Syria and an economic collapse in Venezuela. In a press release issued by the White House on 27 November, Nicaragua was deemed “one of the three undemocratic outliers in the regime”, alongside Cuba and Venezuela. The United States has maintained a sanctions regime against Cuba since 1958 and has issued a number of sanctions against Venezuela since March 2015, in response to the alleged abuse of human rights by the Venezuelan Government in their treatment of anti-government protestors.
The sanctions in relation to Venezuela are currently more extensive than those of the Nicaragua program, having been steadily increased since 2015 as follows:
- E.O. 13692 declaring a national emergency with respect to the situation in Venezuela and providing authority to target persons involved in or responsible for, amongst other things, human rights violations and significant public corruption by senior government officials in the country;
- E.O. 13808 prohibiting transactions by a U.S. person or within the U.S. related to:
- certain new debt of Petroleos de Venezuela, S.A. (PDVSA);
- certain new debt or new equity of the Government of Venezuela;
- existing bonds issued by the Government of Venezuela prior to August 25, 2017; and
- dividend payments or other distributions of profits to the Government of Venezuela from any entity owned or controlled by the Government of Venezuela.
In addition, E.O. 13808 prohibits the purchase by a U.S. person or within the U.S. of most securities from the Government of Venezuela;
- E.O. 13827 prohibiting all transaction related to, provision of financing for, and other dealings in any digital currency, digital coin, or digital token issued by, for, or on behalf of the Government of Venezuela;
- E.O. 13835 which prohibits transactions relating to the purchase of any debt owed to the Government of Venezuela (including PDVSA), such as but not limited to accounts receivable; any debt owed to the Government of Venezuela that is pledged as collateral after May 21, 2018; and the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which it has a 50 percent or greater ownership interest;
- E.O. 13850 which authorises the imposition of blocking sanctions on persons determined to:
- operate in the gold sector of the Venezuelan economy; or
- to be responsible for or complicit in, or to have directly or indirectly engaged in, any transactions involving deceptive practices or corruption and the Government of Venezuela or projects or programs administered by the Government of Venezuela, or to be an immediate adult family member of such a person.
In September 2018 the United Nations Security Council considered whether the political turmoil in Nicaragua could pose a threat to the security of countries across Central America and on 2 October 2018, the High Representative on behalf of the EU issued a declaration in relation to Nicaragua confirming that the situation in the country “remains of serious concern to the European Union and its Member States”. However, at the time of writing, there has been no indication as to whether the UN, EU or UK would issue corresponding sanctions.
Comments from the Trump Administration warning that it would “continue to add pressure on the Ortega regime and its supporters” and “the Nicaraguan regime, like Venezuela and Cuba will feel the full weight of America’s robust sanctions regime” should be heralded as a warning of things to come. OFAC’s move away from designations under the Global Magnitsky program and the creation of a separate and distinct Nicaragua-related program would suggest that further sanctions could be forthcoming, particularly considering the parallels which have already been drawn to the situations in Venezuela, Cuba and Syria. This is very much a watching brief and financial institutions on both sides of the Atlantic should consider any exposure to Nicaragua in light of this recent action.