US Executive Order 13884 - Targeting the Venezuelan Government
On 5 August 2019 US President Trump issued Executive Order 13884 (“the new EO”), which has potentially significant ramifications for members trading with Venezuela.
The new EO imposes an asset freeze against the "Government of Venezuela". All property and interests in property of the Government of Venezuela, which enter US jurisdiction or are within the possession of a US person, must now be blocked. US persons are now prohibited from transacting with the Government of Venezuela, unless an exemption or license applies. Previously US sanctions in respect of Venezuela were primarily targeted towards the oil sector.
The EO defines the term "Government of Venezuela" widely so as to include “…any person who has acted or purported to act directly or indirectly for or on behalf of…” a Venezuelan Government entity (Section 6 (d)).
The EO may have “secondary” effects, i.e. it may also impose restrictions against non-US persons. It authorises the imposition of sanctions against "any person" determined to:
- have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person or entity whose property is blocked pursuant to the EO;
- be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property is blocked pursuant to the EO. (Section 1 (b))
As with a previous EO (EO 13850), it is likely that the US authorities will treat the new EO as having the effect of a secondary sanction.
The new EO lists a number of exemptions which include transactions related to the provision of humanitarian articles such as food and medicine (Section 5 (b)).
OFAC has concurrently issued updated FAQs and a number of updated licenses.
There is now a wide-ranging asset freeze against the Government of Venezuela (GOV). However, transactions and activities related to the performance of agreements in existence prior to 5 August benefit from a wind down period expiring on 4 September 2019.
FAQs – KEY POINTS TO NOTE:
FAQ 680 – the new asset freeze against the Government of Venezuela (GOV) extends to persons or entities in which the GOV owns, directly or indirectly, a 50% or greater interest, and regardless of whether the person/entity appears on the SDN List. This means that many quasi-State commercial entities will be impacted.
FAQ 681 – GL 28 is a brand new license which authorises the winding down of operations, contracts or other agreements involving the GOV that were in effect prior to 5 August 2019. However, this GL only authorises such wind-down dealings with persons who have been blocked under the new 5 August 2019 EO. It does not authorise dealings with persons whose assets have been blocked under previous EOs. Therefore it remains prohibited to transact with PdVSA as it was designated under a different authority, EO 13850.
Links to the full set of GLs:
OFAC issues general licenses in order to authorize activities that would otherwise be prohibited with regard to Venezuela. General licenses allow all US persons to engage in the activity described in the general license without needing to apply for a specific license.
- General License 2A - Authorizing Certain New Debt, New Equity, and Securities Transactions Involving PDV Holding, Inc. and CITGO Holding, Inc.
- General License 3F - Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds
- General License 4C - Authorizing Certain New Debt Transactions and Other Transactions Involving Certain Blocked Persons Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates
- General License 5 - Authorizing Certain Transactions Related to the Petroleos de Venezuela SA 2020 8.5 Percent Bond
- General License 6 - Authorizing Certain Activities Necessary to the Maintenance or Wind Down of Operations or Existing Contracts with Globovision Tele C.A. or Globovision Tele CA, Corp.
- General License 7C - Authorizing Certain Activities Involving PDV Holding, Inc. and CITGO Holding, Inc.
- General License 8C - Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela
- General License 9E - Authorizing Transactions Related to Dealings in Certain Securities
- General License 10A - Authorizing the Purchase in Venezuela of Refined Petroleum Products from Petróleos de Venezuela, S.A. (PdVSA)
- General License 12 - Authorizing Certain Activities Necessary to Wind Down Operations or Existing Contracts with Petróleos de Venezuela, S.A. (PdVSA)
- General License 13C - Authorizing Certain Activities Involving Nynas AB
- General License 14 - Official Business of the United States Government
- General License 15B - Authorizing Transactions Involving Certain Banks for Certain Entities
- General License 16B - Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks
- General License 17 - Authorizing Certain Activities Necessary to Wind Down of Operations or Existing Contracts with Certain Banks
- General License 18A - Authorizing Certain Transactions Involving Integración Administradora de Fondos de Ahorro Previsional, S.A.
- General License 20A - Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela
- General License 21 - Entries in Certain Accounts for Normal Service Charges and Payments and Transfers to Blocked Accounts in U.S. Financial Institutions Authorized
- General License 22 - Venezuela’s Mission to the United Nations
- General License 23 - Third-country Diplomatic and Consular Funds Transfers Authorized
- General License 24 - Certain Transactions Involving the Government of Venezuela Related to Telecommunications and Mail Authorized
- General License 25 - Exportation of Certain Services, Software, Hardware, and Technology Incident to the Exchange of Communications over the Internet Authorized
- General License 26 - Emergency and Certain Other Medical Services Authorized
- General License 27 - Certain Transactions Related to Patents, Trademarks, and Copyrights Authorized
- General License 28 - Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts Involving the Government of Venezuela
- General License 29 - Certain Transactions Involving the Government of Venezuela in Support of Certain Nongovernmental Organizations’ Activities Authorized
- General License 30 - Authorizing Certain Transactions Involving the Government of Venezuela Necessary to Port and Airport Operations
- General License 31 - Certain Transactions Involving the Venezuelan National Assembly, the Interim President of Venezuela, and Certain Other Persons Authorized
- General License 32 - Authorizing Certain Transactions Related to Personal Maintenance of Individuals who are U.S. Persons Residing in Venezuela
- General License 33 - Authorizing Overflight Payments, Emergency Landings, and Air Ambulance Services
- Archive of Expired General Licenses