OFAC Suspends Certain Venezuela Sanctions

On 10/18/23, OFAC provided issued sanctions relief to Venezuela entities in the following sectors:  oil and gas, state-owned gold mining company and Venezuelan sovereign bonds and PdVSA (Petróleos de Venezuela, S.A.)  debt and equity.  OFAC cautioned that it is prepared to revoke these authorizations, if appropriate, to support US foreign policy and national security priorities. Other sanctions and restrictions imposed by the United States on Venezuela remain in place.

Sanctions relief from OFAC stems from the U.S. welcoming the signing of an electoral roadmap agreement between the Unitary Platform and representatives of Nicolas Maduro. The U.S. views the signing of this agreements as a concrete step toward resolution of Venezuela’s political, economic, and humanitarian crisis.

The U.S. State Department states that: Consistent with our longstanding commitment to provide U.S. sanctions relief in response to concrete steps toward competitive elections and respect for human rights and fundamental freedoms, the United States Department of Treasury Office of Foreign Assets Control today (10/18/23) took the following steps:

• Issued a six-month general license temporarily authorizing transactions involving the oil and gas sector in Venezuela. The license will be renewed only if Venezuela meets its commitments under the electoral roadmap as well as other commitments with respect to those who are wrongfully detained. General License (GL 44)
• Issued a second general license authorizing dealings with Minerven – the Venezuelan state-owned gold mining company – which we assess would have the effect of reducing black-market trading in gold. General License (GL 43)
• Amended relevant licenses to remove the secondary trading ban on certain Venezuelan sovereign bonds and PdVSA debt and equity. The ban on trading in the primary Venezuelan bond market remains in place. We assess that this, too, would have the positive effect of displacing nefarious players in this market, and with negligible financial benefit to authorities from Venezuela. General License (GL 31) , General License (9H) and General License (GL 5M)

OFAC also issued General License (GL 45) which authorizes Certain Repatriation Transactions Involving Consorcio Venezolano de Industrias Aeronauticas y Servicios Aereos, S.A.

OFAC released Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18, 2023 which provide further clarity to transactions that are authorized.  The FAQ’s also state that the “U.S. government retains the authority to rescind authorizations should the representatives of Maduro fail to follow through on their commitments, and all other sanctions prohibitions imposed by the United States with respect to Venezuela, including on the Government of Venezuela, remain in place”.

What Venezuela has to do:

The U.S. State Departments notes that the expectation and understanding for the  U.S. is that Venezuela will take the following steps before the end of November 2024:

• Define a specific timeline and process for the expedited reinstatement of all candidates. All who want to run for President should be allowed the opportunity, and are entitled to a level electoral playing field, to freedom of movement, and to assurances for their physical safety.
• Begin the release of all wrongfully detained U.S. nationals and Venezuelan political prisoners.

Note of Caution

Although OFAC has provided authorizations and relief from sanctions, all businesses ought to be aware that these can be revoked at any time.  Moreover, all businesses ought to understand that restrictions are still in place given that the government of Venezuela remains blocked.  That said, all parties that chose to engage or re-engage in the sectors that obtained relief from OFAC ought to consult with a Specialist that understands the compliance policies and risks associated with Venezuela and realize that the General Licenses could be revoked by the U.S. before a transaction is finalized.

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