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30 August 2019
On 5 August 2019 President Trump signed an executive order, freezing all assets in which the Venezuelan government has an interest that are in US hands and prohibiting US persons from conducting transactions with the Venezuelan government, unless specifically exempted or authorised.
Although this is not an embargo on all trade with Venezuela, the executive order goes substantially further than the previous sanctions by:
The term 'Venezuelan government' includes:
No. US persons may still engage in transactions involving the country or people of Venezuela in currencies other than the Venezuelan petro, provided that the transactions do not involve the Venezuelan government, state-owned companies, specially designated nationals (SDNs) or entities that one or more SDNs owns a 50% or more share in. OFAC has also published general licences that authorise some transactions with the Venezuelan government, as discussed below.
In addition to amending some older licences, OFAC has issued 13 new general licences in connection with the executive order.(1)
The general licences are mostly standard, including General Licence 28, which authorises a short wind-down period through 3 September 2019, and the usual licences for transactions with the Venezuelan government relating to IP protection, telecoms and mail, and communications over the Internet. Transactions with the Venezuelan National Assembly and interim President Juan Guaidò's government also have a general licence. Other general licences (eg, the one authorising the operation and use of ports and airports in Venezuela) seem calibrated to allow at least some commerce to continue between the United States and Venezuela.
Brief summaries of the general licences' authorisations are set out below:
Further, US persons may apply to OFAC for specific licences authorising particular transactions that may otherwise be prohibited by the sanctions, provided that those transactions are in the interest of US foreign policy.
OFAC has published revised FAQs on the executive order, noting the following:
Yes, but this must be done with the utmost caution. While the general licences allow parties to make certain payments to Venezuelan government ports and airports, and trademarks and patents may continue to be protected, it is paramount that all aspects of a transaction are carefully checked to ensure that:
For example, if an entity's product must be registered with the Venezuelan government for health or safety reasons and there is a registration fee, such a fee would not be covered by a general licence unless the entity is an NGO (see General Licence 29). As such, any Venezuelan business must be conducted using a fine-tooth comb to ensure that there are no hidden risks.
For further information on this topic please contact Kay C Georgi, Regan K Alberda or Sylvia G Costelloe at Arent Fox LLP's Washington DC office by telephone (+1 202 857 6000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). Alternatively, contact Marwa M Hassoun at Arent Fox LLP's Los Angeles office by telephone (+1 213 629 7400) or email (email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
(1) For further information see "OFAC sanctions Venezuelan state-owned oil giant PDVSA" or "President Trump's 'New' Venezuelan Sanctions: Russian Sectoral Sanctions Déjà Vu". A full list of which can be found here.
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