VENEZUELAN FINANCING RESTRICTIONS TIGHTENED
UNDER RUSSIAN SANCTIONS, NEW GL 15 ISSUED TO ALLOW EXTENDED WIND-DOWN OF DEALINGS WITH GAZ GROUP
A day after Venezuela held elections that resulted in the re-election of President Nicolas Maduro for another six-year term, on May 21, 2018, President Trump issued a new Executive Order further restricting permissible transactions between the U.S. and Venezuela. The sanctions build upon an earlier Executive Order from the Trump administration issued in August of last year which restricted financing for Venezuela and its State-Owned Enterprises.1
Effective May 21, 2018, U.S. persons and entities, or other persons within the territorial United States are prohibited from engaging in:
- the purchase of any debt owed to the Government of Venezuela, including accounts receivable
- any transactions involving debt owed to the Government of Venezuela that is pledged as collateral after May 21, including accounts receivable
- involvement with the “sale, transfer, assignment, or pledging as collateral” of an equity interest in any entity in which the Venezuelan government has an ownership interest of 50 percent or greater
As with other sanctions, any transactions intended to evade or avoid the newest prohibitions are also prohibited. As of today’s date, OFAC has not issued any general licenses related to the most recent round of sanctions against Venezuela.
RUSSIA: GL 15 EXTENDS GAZ GROUP WIND-DOWN PERIOD TO OCTOBER 23, 2018
On May 22, 2018, OFAC issued General License 15 under the Ukraine-Russia sanctions, which extends the wind-down and maintenance period applicable to transactions with GAZ Group to October 23, 2018. The period previously applicable under General License 12b was set to end on June 5, 2018. GL 15 permits only wind-down and maintenance; it does not permit entering into new business arrangements with GAZ Group. This GL 15 is similar to GL 14, which is applicable to transactions with RUSAL.
In order to comply with GL 15, parties must, within 10 business days after the expiration date of the general license, file a comprehensive, detailed report of each transaction, including the names and addresses of parties involved, the type and scope of activities conducted, and the dates on which the activities occurred, with OFAC.
OFAC simultaneously issued General License 12C, which permits unblocked payments made after May 22, 2018 to GAZ Group (unless involving other blocked persons). OFAC clarified that payments made prior to May 22 into blocked accounts shall continue to be blocked.