Additional Sanctions to the Government of Venezuela
On 5th August 2019, President Trump signed a new Executive Order (EO) related to Venezuela, which imposes additional sanctions on the country’s government. Section 1 of the Executive Order imposes “blocking sanctions” on the Venezuelan government. This translates into a ban on Americans dealing with the Venezuelan government and anyone owned or controlled by the government.
The Order also authorizes the imposition of sanctions on any person, regardless of whether or not he or she is a U.S. citizen, of which the U.S. Government determines whether the person:
- Has materially assisted, sponsored or provided financial, material or technological support, as well as goods or services to or on behalf of any person sanctioned under this Order.
- Is owned or controlled by or has acted or purported to act for or on behalf of, directly or indirectly, any person sanctioned under this Order.
Section 3 of the Order clarifies that the prohibitions in Section 1 on dealing with the Government of Venezuela are broad and include:
- Make any contribution or provision of funds, goods or services by, for, or on behalf of any person whose property or property rights are blocked by virtue of this Order.
- Accept any contribution or provision of funds, goods or services from any of these persons.
The term “Government of Venezuela” is broad and includes the State and the Government of Venezuela, any political subdivision, agency or instrument thereof (Central Bank of Venezuela and the oil company PDVSA). It includes any person who is owned or controlled, directly or indirectly, as well as any person who has acted or intends to act directly or indirectly on behalf or in the name of any of the aforementioned persons.
- 1 Exceptions
U.S. individuals are allowed to participate in limited transactions. The following categories of transactions are generally exempt from the prohibitions set forth in the new order:
- Some operations necessary for port and airport operations.
- Telecommunications and mail in which the Government of Venezuela intervenes.
- Settlement transactions.
- Operations in which the National Assembly of Venezuela, interim president Juan Guaidó, participates.
- Humanitarian goods such as food, clothing and medicines intended to alleviate “human suffering”.
- U.S. Government Enterprises.
- Previously Authorized Transactions: Transactions that were previously authorized pursuant to a General License (GC) issued by the Department of the Treasury.
- Export of certain software, hardware and technology services in the exchange of Internet communications e.g. instant messaging.
- Enrollment in certain accounts for charges and payments for normal services and transfers to blocked accounts at U.S. financial institutions. U.S. financial institutions may debit any blocked account at that financial institution as payment or refund of “normal service charges” owed by the holder of that blocked account.
- U.S. individuals residing in Venezuela. They may participate in transactions involving the Government of Venezuela that are normally related and necessary to live in Venezuela.
- Payments, goods or services for the Venezuelan Mission to the United Nations and other transfers of diplomatic funds.
- Emergency and other medical services, as well as transactions involving NGOs.
- Transactions related to patents, trademarks and copyrights.
- 2 Impact
The order states:
“US Persons are not prohibited from carrying out transactions involving the country or the people of Venezuela, as long as they are not sanctioned persons or any conduct prohibited by any other regulation that imposes sanction measures related to the situation in Venezuela.
However, even if transactions are not prohibited, it is likely that financial institutions will increasingly reject and/or block transfers of funds related to Venezuela. This has been stated by David Schwartz, president and executive director of the Florida International Bankers Association (FIBA), since the executive order “encompasses many people and, as a precaution, many banks prefer to close Venezuelan accounts so as not to run risks.