On November 5, 2019 the Office of Foreign Assets Control (OFAC) issued two General Licenses (GLs) authorizing specific transactions involving the Government of Venezuela and categories of persons blocked by Executive Order 13884 (E.O. 13884).
E.O. 13884 was signed by President Donald Trump earlier this year on August 5, 2019. E.O 13884 was intended to increase pressure on the Nicolas Maduro regime by blocking property and property interests of the Government of Venezuela under U.S. jurisdictions and authorizing the U.S. Treasury Department to sanction additional persons who have assisted or supported the Government of Venezuela.
The term “Government of Venezuela,” as defined in E.O. 13884, 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, directly or indirectly, by the foregoing, and any person who has acted or purported to act directly or indirectly for or on behalf of, any of the foregoing, including as a member of the Maduro regime.
Without authorization from OFAC, U.S. persons are generally prohibited from engaging in transactions with the Government of Venezuela, or persons in which the Government of Venezuela owns, directly or indirectly, a 50 percent or greater interest. U.S. persons are not prohibited from engaging in transactions involving the country or people of Venezuela, provided blocked persons or any conduct prohibited by any other Executive Order are not involved.
The two new GLs make it easier for U.S. persons to conduct certain business in Venezuela. In particular, General License 35 authorizes U.S. persons to engage in certain administrative transactions with the Government of Venezuela. This includes paying taxes, fees and import duties, and purchasing or receiving permits, licenses, registrations, certifications and public utility services from the Government of Venezuela, provided that such transactions are ordinarily incident to such person’s day-to-day operations in Venezuela. Businesses seeking to continue operations in Venezuela should be aware that GL 35 does not authorize transactions that are otherwise prohibited by E.O. 13884 or any other Executive Order related to Venezuela.
Although certain administrative transactions are permitted, businesses should be advised that they are required to file biannual reports with OFAC and the Department of State’s Office of Sanctions Policy and Implementation regarding the transactions. The reports must include the names and addresses of the entities remitting and receiving payment, the amount of funds paid to the Government of Venezuela, the type and scope of the activities conducted, and the date of the payments.
OFAC also issued amended General License 34A, which authorizes transactions with certain Government of Venezuela individuals, including U.S. citizens; permanent resident aliens of the U.S.; individuals who have a valid U.S. immigrant or nonimmigrant visa, other than individuals in the United States as part of Venezuela’s mission to the United Nations; former employees and contractors of the Government of Venezuela; and current employees and contractors of the Government of Venezuela who provide health or education services in Venezuela, including at hospitals, schools, and universities.
In connection with the two new GLs, OFAC also published FAQs related to the GLs. In the FAQs, OFAC encourages businesses, especially financial institutions, to conduct due diligence on their customers to ensure that the parties with whom they do business are not blocked. OFAC also warns U.S. persons to be cautious when conducting business in Venezuela to make sure all criteria for use of the General Licenses are met. Finally, as with any General License or specific license, OFAC reserves the right to revoke the authorizations in order to support U.S. foreign policy and U.S. national security policies.
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