US Sanctions – Venezuela government, agencies and entities targeted in new Executive Order 13884
12 August 2019
Members should take note of the latest US sanctions against Venezuela set out in Executive Order 13884 (issued on 5 August 2019) as well as amendments to the existing 12 General Licenses and a further 13 General Licenses issued on 6 August.
New York law firm Freehill Hogan & Mahar LLP (Freehills) report on the impact of the Executive Order 13884, along with the new FAQs issued the following day on 6 August, for both US and non-US persons/entities, the highlights of which are as follows:-
1. US Persons/Entities
(i) All property and interests in property of the Government of Venezuela within the US or in the possession/control of a US person are blocked, effectively freezing all Venezuelan Government assets within the US and preventing their use of the US financial system.
(ii) The Executive Order combined with the FAQs defines the Government of Venezuela as the Government, any agencies of that Government, and entities owned or controlled by that Government. FAQ 680 states that, unless expressly authorised by the US Government, US persons/entities are prohibited from trading/transacting with the Government of Venezuela as defined in the Executive Order and clarifies ownership/control as any entity in which the Government of Venezuela owns, directly or indirectly, a 50% or greater interest. The FAQs further clarify that the prohibition is applicable even if those entities are not specifically named on the US Specially Designated Nationals (SDN) List.
(iii) General Licenses
(a) General License 28 provides a grace period until 4 September 2019 for all transactions and activities which are ordinarily incident and necessary to the wind down of operations, contracts or other agreements involving the Government of Venezuela that were in effect prior to 5 August 2019.
(b) Other General Licenses confirm exemptions from sanctions that are in place for specified periods of time for certain transactions involving Citgo, Chevron and Nynas.
(c) Further, shipments of food, medicine and clothing continue to be exempted from US sanctions.
(iv) Executive Order 13884 largely spares Venezuela’s private sector.
2. Non US Persons/Entities
The Executive Order provides for the blocking of any person who has ‘materially assisted, sponsored or provided financial, material, or technological support’ to anyone on the SDN List or who is otherwise blocked pursuant to the Executive Order. This will therefore include the Government of Venezuela, any agencies of that Government, and entities owned or controlled by that Government (control being any entity in which the Government of Venezuela owns, directly or indirectly, a 50% or greater interest).
Freehills’ advice indicates that it is possible that ocean transportation could be considered as either material assistance or service in support of an entity whose property is blocked under the Executive Order. Furthermore, taking into consideration very recent comments and statements by the US Government, that there is the possibility of a more aggressive implementation of the Executive Order with respect to non-US persons/entities than has previously been the case.
In the light of the above Members and Assureds are strongly recommended to perform careful due diligence before agreeing to any trade connected with Venezuela.
A copy of Freehills’ full advice is available here.
A copy of Executive Order 13884 is available here.
A copy of US Department of the Treasury Venezuela FAQs is available here.
Copies of the General Licenses are available here.