US Dramatically Increases Sanctions on Venezuela

On August 5, 2019, President Trump signed an executive order (the New EO) that significantly expands US sanctions on the Government of Venezuela.

Over the past two years, the US had steadily imposed an array of limited sanctions on the Government of Venezuela.  These sanctions prohibit US individuals and entities (US persons) from dealing in certain government-related debt, bonds, equity interests, dividend payments, digital currency, digital coin, and digital tokens.  The US has also blocked the property and interests in property of certain Venezuelan state-owned entities, most notably, on January 28, 2019, state-owned oil company Petroleos de Venezuela, S.A.

Under the New EO, effective August 5, 2019 all of the Government of Venezuela's property and interests in property that are in the US or in the possession or control of US persons is blocked.  As a result, all assets of the Government of Venezuela that are in the US are frozen, and US persons anywhere in the world are prohibited from engaging in transactions with the Government of Venezuela.

The "Government of Venezuela" is broadly defined in the New EO to include political subdivisions, agencies, and instrumentalities of the Government of Venezuela, persons directly or indirectly owned or controlled by the foregoing, and persons who have acted or purport to act directly or indirectly for or on behalf of, the foregoing.

Going forward, the New EO authorizes the Treasury Department's Office of Foreign Assets Controls (OFAC) to block the property and interests in property of any person determined to have provided certain financial or other support to persons designated as Specially Designated Nationals (SDNs) under the New EO.  Thus, non-US persons that provide such support to SDNs designated under the New EO could have their own property and interests in property blocked.

OFAC has issued a number of amended and new general licenses in connection with the New EO.  Most notably, new General License 31 authorizes transactions with the Venezuelan National Assembly and Interim President of Venezuela Juan Guaido, as well as with officials and representatives appointed by Mr. Guaido.

Although US persons are broadly prohibited under the New EO from involvement in transactions related to the Government of Venezuela, they are not prohibited from engaging in most Venezuela-related transactions that do not involve the Government of Venezuela.  It is difficult to predict, however, how long this will remain the case.