On August 24, 2017, President Trump signed Executive Order 13808 imposing new sanctions against Venezuela largely in response to the political situation in the country, including the “establishment of an illegitimate Constituent Assembly, which has usurped the power of the democratically elected National Assembly and other branches of the Government of Venezuela.” The new sanctions prohibit U.S. persons and those within the United States from engaging in transactions involving the following:
- New debt with a maturity of greater than 90 days of Petroleos de Venezuela, S.A. (“PdVSA”), Venezuela’s state-owned oil company;
- New debt with a maturity of greater than 30 days, or new equity, of the Government of Venezuela, other than debt of PdVSA as defined above;
- Bonds issued by the Government of Venezuela prior to August 24, 2017;
- Dividend payments or other distributions of profits to the Venezuelan Government from any entity owned or controlled, directly or indirectly, by the Venezuelan Government; and
- The purchase, directly or indirectly, of securities from the Government of Venezuela, other than security qualifying as new debt with a maturity of less than or equal to 90 days (for PdVSA) or 30 days (for the Government of Venezuela).
The prohibitions above apply to the Government of Venezuela, its property and interests in property, including entities owned 50 percent or more by the Government of Venezuela.
The U.S. Department of the Treasury (“Treasury”), which administers U.S. financial sanctions, simultaneously issued four general licenses, authorizing the wind down of certain transactions now prohibited, as indicated below:
- General License 1 authorizes U.S. persons to wind down contracts or other agreements now prohibited under EO 13808 that were in effect prior to August 25, 2017. Such winding down transactions are authorizing through September 24, 2017.
- General License 2 authorizes transactions in which the only Venezuelan Government entity involved is CITGO Holding, Inc., or any of its subsidiaries.
- General License 3 authorizes transactions related to, the provision of financing for, and other dealings in specified bonds included on the List of Authorized Venezuelan-Related Bonds.
- General License 4 authorizes all transactions related to, the provision of financing for, and other dealings in new debt related to the exportation or reexportation, from the United States or by a U.S. person, wherever located, of agricultural commodities, medicine, medical devices, or replacement parts and components for medical devices to Venezuela or to persons in third countries purchasing specifically for resale to Venezuela, provided that all such exports or reexports are authorized by the Department of Commerce.
Notably, the Venezuelan Government has not been added to Treasury’s list of Specially Designated Nationals and Blocked Persons. Thus, while U.S. companies and financial institutions can continue to do business with Government of Venezuela entities, they should exercise heighted due diligence when doing so.