President’s Executive Order yesterday (August 24, 2017) imposed additional sanctions with respect to the situation in Venezuela. U.S. Department of the Treasury – OFAC has published four Venezuela-related General Licenses on August 25, 2017. General Licenses will authorize the below described transactions:
General License 1
This general license authorizes activities necessary to Wind Down Existing Contracts. Essentially this general license covers only the transactions if they are necessary to wind down contracts or other agreements. Agreements must be in affect prior to August 25, 2017. This authorization is temporary and valid through September 24, 2017. In addition, OFAC requires reporting of such transactions in 10 days with a detailed information, including the parties involved, the value of the transactions, and the dates of the transactions.
General License 2
This general license authorizes certain transactions involving CITGO Holding, Inc. The condition is that CITGO Holding, Inc. and its subsidiaries must be the only Government of Venezuela entities involved in the transaction.
General License 3
This general license authorizes transactions related to, Provision of Financing For, and Other Dealings in Certain Bonds. Two sets of transactions are authorized here. (1) Transactions related to, the provision of financing for, and other dealings in bonds specified in the Annex to the General License 3, and (2) Transactions related to, the provision of financing for, and other dealings in bonds that were issued prior to August 25, 2017, and by U.S. person entities owned or controlled, directly or indirectly, by the Government of Venezuela.
General License 4
This general license authorizes new debt transactions related to the exportation or reexportation of Agricultural Commodities, Medicine, Medical Devices, or Replacement Parts and Components. General License 4 also provides details of what each of these terms (i.e. Agricultural commodities, Medicine, Medical Devices) mean from the OFAC’s perspective. As such, exporters are urged to review the definitions and restrictions listed on General License 4 to confirm its eligibility for their transaction before using it.
It is important to understand that these four General Licenses do not authorize any transaction that is prohibited under Executive Order of August 24, 2017 or under the Executive Order 13692 of March 8, 2015. Just like the other OFAC issued general licenses, Venezuela related authorizations have limitations and exclusions as well. If you are to export to Venezuela or are planning to involve in one of the transactions described above under one of these general authorizations make sure your transaction is not caught with another prohibition listed on the Executive Order and general license clearly covers the activity.
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