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By: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992

In a major announcement and escalation of the sanctions regime targeting President Maduro and Venezuela, on August 5, 2019, the Trump Administration issued a new Executive Order 13884 (Here) to block all property of the Venezuela Government.  The aggressive action was implemented to target the Maduro regime.  At the same time, OFAC issued 12 amended general licenses (Here) and 13 new general licenses (Here), and related guidance and FAQs (Here and Here).

EO 13884 targets the Venezuelan government and any entities owned 50 percent or more or otherwise controlled by the Venezuelan government.  The new sanctions, while not a full territorial embargo, broadly prohibit virtually all United States Persons from dealings and transactions with the Venezuelan government, including all Venezuelan state-owned enterprises.  Private-to-private commercial transactions that do not involve the Venezuelan government or any related entities are permitted.  United States Persons includes US companies, their branches, US banks, citizens and green-card holders, as well as any person when they are physically located in the United States.  Any funds, property, contracts or other property interests that come into the possession or control of US Persons have to be blocked and reported to OFAC.

The Venezuela government is broadly defined to include any political subdivision, agency or instrumentality thereof, including the Central Bank of Venezuela (CBV) and Petroleos de Venezuela (PdVSA).  The reach of this prohibition extends to any entity owned 50 percent or more by a prohibited government entity or otherwise controlled by the prohibited government entity.

EO 13884 also authorize broad secondary sanctions to sanction any other person who (i) “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person” who is blocked under EO 13884, or (ii) to be owned or controlled by, or have acted on behalf of any person who is blocked under EO 13884.

At the same time, OFAC amended a number of existing general licenses and issued numerous general licenses authorizing a number of activities.

The amended licenses include the following (This is a non-exhaustive list):

General License 7C (Here) — Transactions with PDV Holding, CITGO Holding and Nynas: The amended license authorizes continued dealings with these entities, subject to certain limitations.

General License 8C (Here) — Transactions with PdVSA: The amended license authorizes all transactions and activities ordinarily incident and necessary to operations in Venezuela involving PdVSA in relation to the following entities: Chevron Corporation; Halliburton; Schlumberger Limited; Baker Hughes; and Weatherford International.

General License 10A (Here) — US Persons in Venezuela: The amended license authorizes transactions involving refined petroleum products for personal, commercial, or humanitarian uses.  It does not allow the commercial resale, transfer, exportation, or re-exporation of those products. But it also clarifies that payments of taxes, fees, and import duties to, and purchase or receipt of permits, licenses, or public utility services from the Venezuela government are authorized.

General License 3F (Here) — Dealings in Debt and Securities:  This license was amended to authorize transactions related to, provide financing for, and otherwise deal in bonds that (i) are specified in the Annex to General License 3F provided that any divestments or transfer of, or facilitation of divestment or transfer of, any holdings in those bonds are to a non-US person; or (ii) were issued prior to the effective date of EO 13808.

OFAC also issued a number of new general licenses (This is a non-exhaustive list):

General License 28 (Here) – Wind Down of Transactions with the Venezuelan Government: This general license authorizes all transactions and activities ordinarily incident and necessary to the wind down of operations, contracts, or other agreements involving the Venezuelan government that were in effect prior to August 5, 2019. All wind down activities must be completed by September 4, 2019.

General License 30 (Here) – Port and Airport Operations: this general license authorizes all transactions and activities that are ordinarily incident and necessary to operations or use of ports and airports in Venezuela.

General License 20A (Here) – Humanitarian Assistance and Sales of Agricultural and Medical Commodities: This general license, along with related General Licenses 4C, 22, 23, 24, 26 and 29, are designed to ensure the continued delivery of humanitarian goods and services to the Venezuelan people.

More Information: https://blog.volkovlaw.com/2019/08/ofac-implements-broad-sanctions-against-venezuela/