On March 9, 2015, President Obama signed the Executive Order Blocking Property and Suspending
Entry of Certain Persons Contributing to the Situation in
Venezuela, declaring the current situation in Venezuela a
threat to national security and imposing sanctions on certain
Venezuelan military and security officials. While the sanctions are
limited to certain individuals for now, companies, both foreign and
domestic, doing business in the region should ensure that their
compliance programs capture the new sanctions to prevent possible
violations. U.S. companies with business involving Venezuela should
ensure that their activities do not relate to parties designated
under the new sanctions. Non-U.S. companies engaged in business
with or involving targeted parties face their own risks as
sanctions may be imposed on persons or entities that provide
material support to designated parties.
The Executive Order, promulgated in the wake of President
Obama's signing of the Venezuela Defense of Human Rights and Civil
Society Act of 2014 on December 18, 2014, was issued in
response to "the situation in Venezuela, including the
Government of Venezuela's erosion of human rights guarantees,
persecution of political opponents, curtailment of press freedoms,
use of violence and human rights violations and abuses in response
to antigovernment protests, and arbitrary arrest and detention of
antigovernment protestors, as well as the exacerbating presence of
significant public corruption" in Venezuela.
Pursuant to the new sanctions, the following persons may be
designated on the list of Specially Designated Nationals and
Blocked Persons ("SDN List") and blocked:
- Persons responsible for or complicit in, or responsible for ordering, controlling, or otherwise directing, or who have participated in: (i) actions or policies that undermine democratic processes or institutions; (ii) significant acts of violence or conduct that constitutes a serious abuse or violation of human rights (including against persons involved in antigovernment protests in Venezuela in or since February 2014); (iii) actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or (iv) public corruption by senior officials within the Government of Venezuela.
- Current or former leaders of an entity that has, or whose members have, engaged in any activity described above, or of an entity designated under the sanctions.
- Current or former officials of the Government of Venezuela.
In conjunction with the Executive Order, the U.S. Department of
the Treasury's Office of Foreign Assets Control
("OFAC") added seven Venezuelan military and security
officials to the SDN List. Any entity owned 50 percent or more by
one or more designated persons also is considered a designated
party, regardless of whether the owned or controlled entity itself
is designated on the SDN List.
U.S. companies engaging in activities in Venezuela generally are
prohibited from any business activities that involve or otherwise
relate to these designated individuals or any entities
majority-owned by them. In addition, the designated persons are
prohibited from entering the United States. Finally, any parties,
including non-U.S. persons, also may be designated on the SDN List
and blocked if they: (i) materially assist, sponsor, or provide
financial, material, or technological support for, or goods or
services to or in support of, the above-described persons or
activities; or (ii) are owned or controlled by, or act for or on
behalf of any person designated under the sanctions.
Companies doing business with Venezuela should perform due
diligence on existing or potential business partners, including
customers, to confirm whether they are on the SDN List or owned or
controlled by any designated parties. As additional designations
are possible, companies should also evaluate whether their business
involves any of the categories of potential sanctioned parties,
such as current or former officials of the Government of Venezuela.
This will allow companies to assess their current risk against an
expansion of the sanctions or additions to the SDN List, and plan
for contingencies if those occur.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.