On August 5, 2019, the U.S. Administration imposed blocking sanctions on the Government of Venezuela (“GOV”) under a new executive order. Although named individual officials, the Central Bank of Venezuela, and Petróleos de Venezuela, S.A. (“PdVSA”) were already blocked entities under U.S. sanctions, now all Venezuelan government entities and state-owned enterprises are blocked entities.
Unless a license applies:
- all property and interests in property (broadly defined) of the GOV within U.S. jurisdiction are blocked; and
- all transactions within U.S. jurisdiction in which the GOV has an interest are prohibited.
GOV entities are now effectively barred from the U.S. economy and from U.S. dollar transactions.
However, the impact of this expanded designation has been significantly mitigated by 25 new and amended general licenses issued by OFAC, together with related guidance. Importantly, treatment of pre-sanctions Venezuelan bonds and dealings with PdVSA remain essentially unchanged, and most activities previously authorized by OFAC general license remain authorized.
The imposition of blocking sanctions on the entire GOV marks a meaningful expansion of U.S. sanctions against Venezuela. While the practical impact of the designation may be limited by the general licenses and the fact that PdVSA and the Central Bank of Venezuela were already subject to blocking sanctions, the complexity of one of the most complex U.S. sanctions regimes has increased. Parties involved in any dealings involving Venezuela face increased diligence requirements to ensure their activities remain authorized.
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