OFAC ISSUES NEW REGULATIONS REGARDING ITS VENEZUELA-RELATED SANCTIONS

Published 11 November 2019 by Diaz Reus

On November 5, 2019, the Office of Foreign Assets Control (“OFAC”) issued new regulations regarding Executive Order (“E.O.”) 13884 whereby, on August 5, 2019,  President Donald Trump (i) blocked all property or interest in property of the Government of Venezuela within or transiting U.S. jurisdiction; (ii) prohibited U.S. persons from engaging in any transactions with the Government of Venezuela or entities in which it has, directly or indirectly, 50% or greater ownership interest; and (iii)  authorized OFAC to include in its Specially Designated Nationals and Blocked Persons list any person that is determined, in consultation with the Secretary of State, to have materially assisted, sponsored, or provided support to the Government of Venezuela; or be owned or controlled by, or to have acted or purported to act for, or on behalf of, the Government of Venezuela.

The term ‘‘Government of Venezuela’’ includes the State and Government of Venezuela, any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela and Petroleos de Venezuela, S.A. (PDVSA), any person owned or controlled by the foregoing, and any person who has acted or purported to act for or on behalf of, any of the foregoing.

Specifically, OFAC issued General License No. 34A expanding the authorizations initially established by General License No. 34 for certain transactions and activities that would be otherwise prohibited by E.O. 13884. General License No. 34A now authorizes operations with current employees and contractors of the Government of Venezuela who provide health or education services in Venezuela, including at hospitals, schools, and universities. It also authorizes that individuals covered by this general license receive salaries, pensions, annuities,  or other employment-related payments or benefits.

On the same date, OFAC issued General License No. 35 “Authorizing Certain Administrative Transactions with the Government of Venezuela.” Particularly, this general license authorizes U.S. persons to pay taxes, fees, and import duties to the Government of Venezuela, and to purchase or receive permits, licenses, registrations, certifications, and public utility services from the Government of Venezuela, so long as these transactions are necessary and ordinarily incident to such persons’ day-to-day operations.  

DRT Commentary

With these new general licenses, OFAC counteracted the undesired effects that E.O. 13884 had for persons providing humanitarian services in Venezuela, or that, because of their day to day activities, had to make legal payments to the Government of Venezuela. In any event, persons subject to OFAC’s jurisdiction conducting transactions under these general licenses should take the necessary measures to ensure compliance with the terms of the authorization. For example, General Licenses No. 34A and 35 do not authorize the unblocking of funds blocked pursuant to, or the processing of any transactions prohibited under, any executive order other than E.O. 13884. In addition, these persons must file periodic reports pursuant to OFAC regulations.