On February 11, 2019, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended two General Licenses (GLs) and revised three Frequently Asked Questions (FAQs) relating to the January 28, 2019 designation of Petróleos de Venezuela, S.A. (PdVSA) and the Government of Venezuela.
The amended GLs provide further guidance on how to navigate the recently-issued sanctions on PdVSA.
Amended GLs:
General License 3C (“GL3C”): replaces GL3B by (a) extending the deadline to wind down financial contracts “involving, or linked to” so-called “GL3C Bonds” from 12:01 AM on March 3 to 12:01 AM on March 11, 2019, and (b) clarifying that the GL only authorizes U.S. Persons to purchase or invest in GL3C Bonds if such purchases or investments are ordinarily incident and necessary to the divestment or transfer of holding in GL3C Bonds.
General License 9B (“GL9B”): replaces GL9A with similar amendments, including by (a) extending the wind-down period to 12:01 AM on March 11, 2019 from March 3, 2019 and (b) clarifying and re-ordering the conditions and exceptions on the granted authorization.
For more information on GL3B and GL9A, please see our recent post.
Updated FAQs:
FAQ 650: addresses the issue of the expected level of due diligence required for the recently amended GLs. It also states that GL3C and GL9B authorize U.S. persons to facilitate the transfer or divestment of securities or bonds to non-U.S. persons.
FAQ 661: provides further explanation on what GL9B authorizes in terms of the PdVSA securities. It states that if a U.S. person decides to sell or transfer any interests in the PdVSA securities, it must be to a non-U.S. person. It also clarifies that U.S. persons may continue to hold their PdVSA securities while still being subject to certain restrictions on the sale in secondary markets.
FAQ 662: explains that GL3C allows U.S. persons to divest, transfer, or facilitate the divestment or transfer of any of GL3C Bonds to any non-U.S. person. Further, it states that U.S. persons may continue to hold their interests in the GL3C Bonds, but are subject to certain restrictions on the sale of those bonds in the secondary market. Finally, it notes that while non-U.S. persons may continue to deal with the GL3C Bonds, if the transactions involve a U.S. Person or the U.S. financial system, they must comply with the terms of GL3C.
For more information on the PdVSA sanctions and guidance under any Venezuela-related sanction, please contact the Crowell & Moring team.
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