Worldwide: Venezuela-Related Sanctions: U.S. And EU Developments And Compliance Challenges

I. Introduction

This article provides an overview of recent developments in Venezuela-related sanctions in the United States ("U.S.") and the European Union ("EU"), where authorities have imposed new sanctions in response to ongoing political developments. Since 2014, Venezuela has faced an increasingly hardened sanctions regime imposed by western nations. While this article focuses on the U.S. and the EU's Venezuela-related sanctions, several other jurisdictions have also issued sanctions against Venezuela, such as Canada, 69 several countries that are candidates for future membership of the EU,70 and many of the United Kingdom's overseas territories.71

In parts II and III, we provide an overview of the U.S. and EU Venezuela-related sanctions, respectively. Part IV discusses compliance challenges for businesses navigating Venezuela-related sanctions and practical guidance to ensure compliance.

II. Overview of the U.S. Venezuela- Related Sanctions Program

1. Venezuelan Political Context

Venezuela is currently experiencing a period of political opposition towards the Government of Venezuela under the presidency of Nicolas Maduro.72 Protestors have expressed their disapproval of the country's hyperinflation, food and medicine shortages, erosion of a fair democratic process, crime and poverty, among other human rights issues.73 In response to the antigovernment protests in 2014, the U.S. government determined that several senior government officials in Venezuela were responsible for or complicit in significant acts of violence, abuses or violations of human rights against citizens of Venezuela, including antigovernment protestors.74

As a result, on December 8, 2014, President Barack Obama signed the Venezuela Defense of Human Rights and Civil Society Act of 2014 (the "Act").75 The Act imposed targeted sanctions on persons responsible for violations of human rights of antigovernment protesters in Venezuela. U.S. government officials stressed that these targeted sanctions were not against the country of Venezuela but only against the individuals deemed responsible for or complicit in human rights and other violations.76

2. Implementation of Venezuela-Related Sanctions Program

2.1. Developments under the Obama Administration

The Venezuela-related sanctions program implemented by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") began on March 8, 2015 when President Obama issued Executive Order ("E.O.") 13692 "Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela."77 This E.O. declared a national emergency with respect to the political situation in Venezuela and stated that the Government of Venezuela's erosion of human rights guarantees, persecution of political opponents and other acts of repression78 constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.79 This list-based sanction was the first of a series of Venezuela-related sanctions.

E.O. 13692 blocks the property and interests in property of designated individuals and entities designated for the imposition of sanctions pursuant to this E.O. and generally prohibits U.S. persons wherever located from engaging in any transactions or dealings with such individuals or entities, including their property and interests in property. The E.O. designated seven Venezuelan military and law enforcement senior officials as blocked persons for their involvement in the situation in Venezuela. OFAC expanded the Venezuela-related sanctions program's Specially Designated Nationals ("SDN") list pursuant to this E.O., and as of September, 25, 2018, there were 65 individuals, six entities and one aircraft, which U.S. persons are generally prohibited from dealing with.80 These sanctions also prohibit designated individuals from traveling to the United States, except as authorized by the Secretary of State.81 Additionally, entry into the United States is suspended for other individuals, who are not explicitly named on the SDN list but meet the criteria of a blocked person under E.O. 13692.82

Footnotes

68 The views expressed in this article are those of the authors only. The authors would like to thank Justin Campbell and Malika Moore for their research assistance.

69 Canada first issued sanctions against Venezuela pursuant to an Association Agreement it formed with the United States on September 22, 2017 and again on May 30, 2018 against 54 individuals in the Maduro regime it deemed responsible for the deterioration of democracy in Venezuela. See Special Economic Measures (Venezuela) Regulations, SOR/2017-204; see also Regulations Amending the Special Economic Measures (Venezuela) Regulations, SOR/2018-114.

70 Macedonia, Montenegro, Albania, Bosnia and Herzegovina, Iceland, Liechtenstein, Norway, Ukraine, the Republic of Moldova and Georgia, which are currently not part of the EU, have aligned themselves with the EU Council Decision (CFSP) 2018/90 imposing sanctions on Venezuela. See Council of the EU Press Release 62/18, Declaration by the High Representative on behalf of the EU on the alignment of certain third countries concerning restrictive measures in view of the situation in Venezuela (Feb. 14, 2018), http://www.consilium.europa.eu/en/press/press-releases/2018/02/14/declaration-by-the-high-representative-on-behalf-of-the-eu-on-the-alignment-of-certain-third-countries-concerning-restrictive-measures-in-view-of-the-situation-in-venezuela/pdf.

71 The United Kingdom passed an order giving effect to the EU sanctions against Venezuela in many of its overseas territories. See The Venezuela (Sanctions) (Overseas Territories) Order 2018, No. 179.

72 See How Venezuela's crisis developed and drove out millions of people, BBC News (Aug. 22, 2018), https://www.bbc.co.uk/news/world-latin-america-36319877; Anthony Faiola, Venezuelan President Nicolás Maduro wins reelection amid charges of irregularities¸ WASH. POST (May 20, 2018), https://www.washingtonpost.com/world/the_americas/crisisweary-venezuelans-are-voting-in-election-decried-as-a-maduro-powergrab/2018/05/20/cb7b579e-57d6-11e8-9889-07bcc1327f4b_story.html?utm_term=.465cd0e9c9a4; see also William Neuman & Nicholas Casey, Venezuela Election Won by Maduro Amid Widespread Disillusionment, N.Y. TIMES (May 20, 2018), https://www.nytimes.com/2018/05/20/world/americas/venezuela-election.html?rref=collection%2Ftimestopic%2FVenezuela&action=click&contentCollection=world®ion=stream&module=stream_unit&version=latest&contentPlacement=16&pgtype=collection.

73 Nicholas Casey, Dying Infants and No Medicine: Inside Venezuela's Failing Hospitals, N.Y. TIMES, (May 15, 2016), https://www.nytimes.com/2016/05/16/world/americas/dying-infants-and-no-medicine-inside-venezuelas-failing-hospitals.html; Kirk Semple, In a Venezuela Ravaged by Inflation, 'a Race for Survival', N.Y. TIMES, (Dec. 2, 2017), https://www.nytimes.com/2017/12/02/world/americas/venezuela-nicholas-maduro-inflation-hyperinflation.html?mtrref=www.nytimes.com&mtrref=www.nytimes.com&mtrref=www.nytimes.com&mtrref=www.nytimes.coml.

74 See The White House Office of the Press Secretary, Fact Sheet: Venezuela Executive Order (Mar. 9, 2015), https://obamawhitehouse.archives.gov/the-press-office/2015/03/09/fact-sheet-venezuela-executive-order; see also Venezuela Defense of Human Rights and Civil Society Act of 2014, Pub. L. No. 113-278, 128 Stat. 3011.

75 Venezuela Defense of Human Rights and Civil Society Act of 2014, Pub. L. No. 113-278, 128 Stat. 3011 (imposing targeted sanctions on persons responsible for violations of human rights of antigovernment protesters in Venezuela, to strengthen civil society in Venezuela, and for other purposes; also highlighted the U.S. government's goal of working with the EU to ensure the peaceful resolution of the situation in Venezuela and the cessation of violence against antigovernment protestors).

76 See generally Fact Sheet: Venezuela Executive Order, supra note 74.

77 Exec. Order No. 13692, 80 Fed. Reg. 12,747 (Mar. 8, 2015); President Barack Obama Issued Executive Order 13692 pursuant to the International Emergency Economic Powers Act, 50 U.S.C. § 1701, the National Emergencies Act, 50 U.S.C. § 1601, the Venezuela Defense of Human Rights and Civil Society Act of 2014, Pub. L. No. 113-278, section 212(f) of the Immigration and Nationality Act of 1952 (8 U.S.C. § 1182(f)) and section 301 of title 3 of the United States Code.

78 Exec. Order 13692 also states that the Government of Venezuela's "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" also constitute an "unusual and extraordinary threat to the national security and foreign policy of the United States." 80 Fed. Reg. at 12,747.

79 Exec. Order No. 13692, supra note 78; see also International Emergency Economic Powers Act, 50 U.S.C. §1701 ("Any authority granted to the President by section 1702 of this title may be exercised to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat."); National Emergencies Act, 50 U.S.C. §§ 1601-1651.

80 OFAC's SDN List details the specific targets of U.S. sanctions. Designated individuals and entities on OFAC's SDN list are prohibited from engaging in any transactions involving U.S. persons or the territory of the United States. For an updated list of the Venezuelan individuals and entities on OFAC's SDN List, see U.S. Department of the Treasury, Office of Foreign Assets Control, Specially Designated Nationals and Blocked Persons List (SDN) Human Readable Lists (accessed on Aug. 31, 2018), https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx.

81 See U.S. Department of State, Venezuela-Related Sanctions, https://www.state.gov/e/eb/tfs/spi/venezuela  (last visited Aug. 31, 2018).

82 Section 1(a)(ii)(A-E) of Exec. Order No. 13692, 80 Fed. Reg. 12747 (Mar. 8, 2015) ("(ii) [A]ny person determined by the Secretary of the Treasury, in consultation with the Secretary of State: (A) to be responsible for or complicit in, or responsible for ordering, controlling, or otherwise directing, or to have participated in, directly or indirectly, any of the following in or in relation to Venezuela: (1) actions or policies that undermine democratic processes or institutions; (2) 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; (3) actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or (4) public corruption by senior officials within the Government of Venezuela; (B) to be a current or former leader of an entity that has, or whose members have, engaged in any activity described in subsection (a)(ii)(A) of this section or of an entity whose property and interests in property are blocked pursuant to this order; (C) to be a current or former official of the Government of Venezuela; (D) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of: (1) a person whose property and interests in property are blocked pursuant to this order; or (2) an activity described in subsection (a)(ii)(A) of this section; or (E) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.").

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