March 22, 2019: OFAC designates BANDES and issues a slew of new Venezuela General Licenses

Friday afternoon, OFAC (without sending out email notifications like it usually does), designated the following entities: under its Venezuela sanctions program.

In addition, it modified General License 4, and added 4 new ones – 15 through 18:

In addition, OFAC is amending General License 4 – “Authorizing New Debt Transactions and Transactions involving Certain Banks Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, or Replacement Parts and Components,” and issuing the following four new Venezuela-related general licenses in connection with this designation:  General License 15 – “Authorizing Transactions Involving Certain Banks Prohibited by Executive Order 13850 for Certain Entities,” General License 16 – “Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks,” General License 17 – “Authorizing Certain Activities Necessary to Wind Down of Operations or Existing Contracts with Certain Banks,” and General License 18 – “Authorizing Certain Transactions Involving Integracion Administradora de Fondos de Ahorro Previsional, S.A.” 

General License 4A explicitly says

This general license does not authorize:

(A) Any transactions or dealings with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay);

I will post the full text of the other licenses separately.

And there were 2 new Frequently Asked Questions (FAQs), too:

Executive Order 13857 of January 25, 2019 “Taking Additional Steps to Address the National Emergency with Respect to Venezuela”. Please note that the FAQs in this section will be updated as appropriate to reflect the designation of PdVSA.  


649. What does Executive Order 13857 of January 25, 2019 “Taking Additional Steps to Address the National Emergency with Respect to Venezuela” do and how does this impact OFAC’s Venezuela-related sanctions?  

Executive Order 13857 of January 25, 2019 “Taking Additional Steps to Address the National Emergency with Respect to Venezuela” broadens the definition of the term “Government of Venezuela” to include persons that have acted, or have purported to act, on behalf of the Government of Venezuela, including members of the Maduro regime, for purposes of Executive Orders 13692, 13808, 13827, 13835, and 13850.  All existing Venezuela-related sanctions remain in effect. [01-28-2019] 


663. Does the Secretary of the Treasury’s determination on March 22, 2019, that persons operating in the financial sector of the Venezuelan economy may be subject to sanctions pursuant to Executive Order 13850, as amended, mean that all Venezuelan financial institutions have been sanctioned by OFAC as of March 22, 2019, and are now blocked persons?

No.  Only those persons listed on OFAC’s SDN List, and entities that they own, directly or indirectly, 50 percent or more of, are blocked persons and subject to sanctions pursuant to E.O. 13580, as amended. [03-22-2019] 


664. Can U.S. financial institutions process transactions and maintain correspondent accounts in connection with activities authorized under Venezuela General Licenses 4A, 15, 16, 17, and 18?

U.S. financial institutions and U.S. registered money transmitters are authorized to process transactions involving Banco de Venezuela, S.A. Banco Universal (Banco de Venezuela) or Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunas, Banco Universal C.A. (Banco Bicentenario del Pueblo) for purposes of Venezuela General Licenses 4A, 15, 16, and 17, Banco Prodem S.A. for purposes of General License 17, and Integracion Administradora de Fondos de Ahorro Previsional, S.A. for purposes of General License 18, in each case so long as the underlying transaction or activity is authorized under the relevant general license.  

U.S. financial institutions that maintain correspondent accounts for Banco de Venezuela or Banco Bicentenario del Pueblo for purposes of General Licenses 4A, 15, 16, and 17, Banco Prodem S.A. for purposes of General License 17, and Integracion Administradora de Fondos de Ahorro Previsional, S.A. for purposes of General License 18 may debit or credit such accounts for transactions consistent with the activity authorized in the relevant general license. [03-22-2019]

And Treasury issued the following press release:

PRESS RELEASES

Treasury Sanctions BANDES, Venezuela’s National Development Bank, and Subsidiaries, in Response to Illegal Arrest of Guaido Aide

Washington – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Banco de Desarrollo Economico y Social de Venezuela, or BANDES, pursuant to E.O. 13850, as amended, for operating in the financial sector of the Venezuelan economy, as well as four additional financial institutions that BANDES owns or controls.  

“The willingness of Maduro’s inner-circle to exploit Venezuela’s institutions knows no bounds.  Regime insiders have transformed BANDES and its subsidiaries into vehicles to move funds abroad in an attempt to prop up Maduro.  Maduro and his enablers have distorted the original purpose of the bank, which was founded to help the economic and social well-being of the Venezuelan people, as part of a desperate attempt to hold onto power,” said Treasury Secretary Steven T. Mnuchin.  “The regime’s continued use of kidnapping, torture, and murder of Venezuelan citizens will not be tolerated by the U.S. or the international coalition that is united behind President Guaido.  Roberto Marrero and other political prisoners must be released immediately.”

Today’s action designating BANDES and its subsidiaries follows a determination by Secretary of the Treasury, Steven T. Mnuchin, in consultation with Secretary of State Michael Pompeo, that persons operating in Venezuela’s financial sector may be subject to sanctions. 

The following entities designated today have been determined to operate in the financial sector of the Venezuelan economy, or are owned or controlled by an entity that operates in the financial sector of the Venezuelan economy:

  • BANDES is based in Venezuela, and is a state-owned and controlled bank.  As Venezuela’s national development bank, BANDES was created in order to promote the economic development and sustained growth of Venezuela, to include providing services such as monetary intermediation, credit, and security and commodity contracts brokerage services, among other financial and trust activities.  Simon Alejandro Zerpa Delgado, who was designated by OFAC pursuant to E.O. 13692 on July 26, 2017, is the Chief Executive and President of the Board of the bank.  
  • Banco Bandes Uruguay S.A. is based in Uruguay.  In early 2019, Maduro tried to move over one billion dollars out of Venezuela via BANDES to its subsidiary in Uruguay, Banco Bandes Uruguay S.A. 
  • Banco Bicentenario del Pueblo, de la Clase Obrera, Mujer y Comunias, Banco Universal C.A. is based in Venezuela. 
  • Banco de Venezuela, S.A. Banco Universal is based in Venezuela. 
  • Banco Prodem S.A. is based in Bolivia.

For information about the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds, including how they try to exploit the U.S. financial system and real estate market, please refer to Treasury’s Financial Crimes Enforcement Network (FinCEN) advisories FIN-2017-A006, “Advisory on Widespread Public Corruption in Venezuela,” and FIN-2017-A003, “Advisory to Financial Institutions and Real Estate Firms and Professionals.”

As a result of today’s action, all property and interests in property of these entities, and of any entities that are owned, directly or indirectly, 50 percent or more by this entity, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

Concurrent with today’s action, OFAC announced five General Licenses.

U.S. sanctions need not be permanent; sanctions are intended to bring about a positive change of behavior.  The United States has made clear that the removal of sanctions is available for persons designated under E.O. 13692 or E.O. 13850, both as amended, who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the Maduro regime, and combat corruption in Venezuela.

Links:

OFAC Notice

General Licenses: 4A, 15, 16, 17, 18

Treasury Press Release

New FAQs

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