Venezuela Sanctions
The United States has imposed a series of US economic sanctions on Venezuela, primarily targeting its government and key industries in response to ongoing political and human rights concerns. A significant aspect of these measures includes the designation of Venezuela’s national oil company, Petroleos de Venezuela S.A. (PdVSA), on the Specially Designated Nationals and Blocked Persons List (SDN List) by the Office of Foreign Assets Control (OFAC). This designation, pursuant to Executive Order 13850, prohibits U.S. persons from engaging in transactions with PdVSA or any entity owned 50% or more by it.
Businesses and individuals involved in activities that might be affected by the regulations should consult with experienced sanctions lawyers, who can provide legal assistance on sanctions and ensure compliance with OFAC.
Why Does Venezuela Face Sanctions?
The United States first imposed targeted sanctions on Venezuelan individuals and entities in 2005, focusing on those involved in criminal activities, corruption, and undermining democratic processes. As the political situation deteriorated under Maduro, who has been in power since 2013, the U.S. expanded its sanctions regime. In 2015, President Obama issued Executive Order 13692, declaring Venezuela a national security threat and targeting individuals responsible for human rights abuses and antidemocratic actions.
In response to increasing repression and economic mismanagement, the Trump Administration further expanded sanctions against Venezuela in 2017 to include financial and sectoral restrictions. These measures targeted Venezuela’s access to U.S. financial markets and prohibited transactions involving Venezuelan debt and equity. The OFAC sanctions Venezuela also extended to key industries, such as the petroleum, gold, and mining sectors, which are vital to the Venezuelan economy.
A significant focus of the OFAC sanctions has been on Venezuela’s state oil company, Petroleos de Venezuela S.A. (PdVSA). In January 2019, the U.S. designated PdVSA on the Specially Designated Nationals and Blocked Persons List (SDN List), effectively cutting off its access to U.S. markets and severely impacting Venezuela’s oil production, which is a crucial source of revenue for the government.
Despite ongoing international pressure, the Maduro regime remains in power, and Venezuela continues to face a severe economic and humanitarian crisis. The Biden Administration has offered conditional sanctions relief to incentivize free and fair elections, but most sectoral sanctions against Venezuela remain in place due to the regime’s continued antidemocratic actions.
OFAC General License Venezuela
The Office of Foreign Assets Control (OFAC) issues OFAC Venezuela general licenses to authorize specific activities that would otherwise be prohibited under the U.S. sanctions.
- General License 7C: Authorizes certain transactions with PDV Holding, Inc. and CITGO Holding, Inc., allowing limited interactions with these entities despite their connection to PdVSA, a Specially Designated National (SDN);
- General License 8N: Permits certain activities necessary for the limited maintenance of essential operations involving PdVSA and its subsidiaries, focusing on safety and asset preservation;
- General License 9H: Allows transactions related to the divestment or transfer of pre-sanctioned debt of PdVSA entities to non-U.S. persons, facilitating financial adjustments without violating sanctions;
- General License 10A: Provides that U.S. persons in Venezuela may purchase refined petroleum products from PdVSA for personal, commercial, or humanitarian use, ensuring basic needs are met;
- General License 31B: Authorizes certain transactions involving the IV Venezuelan National Assembly, supporting diplomatic and political engagements;
- General License 40C: Allows the exportation or reexportation of liquefied petroleum gas to Venezuela, addressing energy needs while maintaining compliance with sanctions;
- General License 41: Permits certain transactions related to Chevron Corporation’s joint ventures in Venezuela, facilitating continued operations under specified conditions;
- General License 44A: Temporarily authorizes transactions in the Venezuelan oil and gas sector, including those involving PdVSA, subject to specific conditions.
Anti-Money Laundering (AML) in Venezuela
Venezuela has long struggled with pervasive money laundering activities, exacerbated by widespread corruption and a lack of effective regulatory oversight. The country has been placed on the Financial Action Task Force (FATF) list of jurisdictions with strategic anti-money laundering (AML) deficiencies.
Political corruption
The regime of Nicolás Maduro has been linked to numerous illicit activities, including money laundering, which are used to sustain governmental operations and enrich regime officials. Corruption is endemic, with state-owned enterprises often implicated in financial crimes.
Drug trafficking
Venezuela serves as a significant transit point for cocaine, with drug traffickers collaborating with corrupt officials to move narcotics through the country. The proceeds from these activities are often laundered through complex financial networks.
Illicit gold trade
Illegally mined gold is another major source of illicit profit. The gold is smuggled out of Venezuela, often disguised before entering international markets, contributing to the country’s money laundering challenges.
Currency manipulation
Venezuela’s distorted multi-tiered foreign exchange system and strict price controls create opportunities for currency arbitrage, facilitating money laundering through trade-based schemes.
Contact attorney on Venezuela General License?
If you are encountering challenges related to OFAC General Licenses for Venezuela, our team of experienced OFAC attorneys is ready to assist you. We have extensive expertise in navigating the complexities of OFAC regulations and can provide comprehensive support to ensure compliance with OFAC Venezuela sanctions while pursuing your business objectives. Reach out to us to schedule a consultation.
