New sanctions program targets Venezuelan officials

Authors: Stephen M. McNabb, Kimberly Hope Caine Publication | March 2015

On March 9, 2015, President Obama issued Executive Order ("E.O.") 13692 imposing targeted sanctions on Venezuela.  The E.O. implements and expands upon the Venezuela Defense of Human Rights and Civil Society Act of 2014, signed by the President on December 18, 2014.  Specifically, the E.O. (1) designates seven individuals as Specially Designated Nationals ("SDNs"), (2) authorizes the designation of additional parties as SDNs who are engaged in specified activities, and (3) suspends entry into the United States of the designated persons.  The sanctions do not presently target the people or economy of Venezuela.  A fact sheet from the White House and the transcript of a background conference call regarding the E.O. have been published.

Under the E.O., the following persons may be designated on the Treasury Department's Specially Designated Nationals and Blocked Persons List ("SDN List") and blocked:

  • Persons determined 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:
    • actions or policies that undermine democratic processes or institutions;
    • 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;
    • actions that prohibit, limit, or penalize the exercise of freedom of expression or peaceful assembly; or
    • 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 of the above activities, or of an entity designated under these sanctions;
  • Current or former officials of the Government of Venezuela;
  • Persons determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of a person designated under these sanctions or any of the above activities; and,
  • Persons determined to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person designated under these sanctions.

Pursuant to the E.O., the Treasury Department's Office of Foreign Assets Control ("OFAC") added seven Venezuelan individuals to the agency's SDN List.  OFAC sanctions, which can be either comprehensive (i.e., Cuba, Iran, Sudan, and Syria) or limited (as these are), are enforceable against all US persons.  The regulations typically define a US person as "any United States citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States."1  In some instances (Cuba and now Iran), US sanctions also apply to non-US entities that are owned or controlled by US entities.  US sanctions also can extend to non-US persons even where there is no US person involvement.  For example, they may apply to non-US persons that "cause" a US person to violate US law under section 206(a) of the International Emergency Economic Powers Enhancement Act of 2007 and other legal theories, to non-US persons that re-export controlled US-origin goods to sanctioned countries, and to non-US persons that provide material assistance or support to SDNs.

OFAC prohibits virtually all business dealings with persons and entities listed on the SDN List.  Entities that one or more persons on the SDN List owns (defined as a direct or indirect ownership interest of 50% or more in the aggregate) are also blocked, regardless of whether that entity is separately named on the SDN List.  Additionally, most sanctions programs prohibit US persons from facilitating transactions with sanctioned countries.2  "Facilitate" is defined broadly to include all instances where a US person "assists" or "supports" a non-US person in transactions, directly or indirectly, involving sanctioned countries or parties.

The following seven Venezuelan government officials were added to the SDN List pursuant to E.O. 13692:

  • Antonio José Benavides Torres: Commander of the Strategic Region for the Integral Defense ("REDI") of the Central Region of Venezuela's Bolivarian National Armed Forces ("FANB") and former Director of Operations for Venezuela's Bolivarian National Guard ("GNB").
  • Gustavo Enrique González López: Director General of Venezuela's Bolivarian National Intelligence Service ("SEBIN") and President of Venezuela's Strategic Center of Security and Protection of the Homeland ("CESPPA").
  • Justo José Noguera Pietri: President of the Venezuelan Corporation of Guayana ("CVG"), a state-owned entity, and former General Commander of Venezuela's Bolivarian National Guard ("GNB").
  • Katherine Nayarith Haringhton Padron: national level prosecutor of the 20th District Office of Venezuela's Public Ministry.
  • Manuel Eduardo Pérez Urdaneta: Director of Venezuela's Bolivarian National Police.
  • Manuel Gregorio Bernal Martínez: Chief of the 31st Armored Brigade of Caracas of Venezuela's Bolivarian Army and former Director General of Venezuela's Bolivarian National Intelligence Service ("SEBIN").
  • Miguel Alcides Vivas Landino: Inspector General of Venezuela's Bolivarian National Armed Forces ("FANB") and former Commander of the Strategic Region for the Integral Defense ("REDI") of the Andes Region of Venezuela's Bolivarian National Armed Forces.

US persons are prohibited from engaging in any transactions that involve or otherwise relate to these seven individuals, or any entity owned 50% or more by one or more of these individuals.  The prohibitions include but are not limited to: (1) the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person designated under these sanctions; and (2) the receipt of any contribution or provision of funds, goods, or services from any such person.  In addition, non-US persons may trigger the prohibitions as they extend to any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this order, as well as any conspiracy formed to violate any of the prohibitions set forth in the E.O.  In addition, these seven individuals are prohibited from entering the United States.

Companies that do business in Venezuela should ensure that they are kept up-to-date on all sanctions developments.  It is difficult to predict with any certainty whether and to what extent the US government will expand these sanctions, but as the Russia/Ukraine example indicates, US sanctions laws may change rapidly with little to no warning.  Companies should assess their risks in light of these and potential future sanctions on Venezuela, and consider, as warranted, conducting screening and due diligence on business partners, customers, and other third parties in Venezuela; insisting on stringent contractual representations, warranties, and covenants in their agreements with such third parties; and establishing "wind down" procedures to facilitate the termination of operations or transactions that become subject to sanctions.

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We will continue to closely monitor these developments and issue additional briefings as warranted.


1 See 31 C.F.R. § 560.314.

2 See, e.g., 31 C.F.R. § 560.208 (prohibiting US persons from approving, financing, facilitating, or guaranteeing any transaction by a foreign person that would have been prohibited if performed by a US person or within the United States).


Contacts

Stephen M. McNabb

Stephen M. McNabb

Washington, DC
Kimberly Hope Caine

Kimberly Hope Caine

Washington, DC