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President Trump issues Executive Order prohibiting Venezuelan cryptocurrency transactions; OFAC sanctions additional Venezuelan officials
On March 19, President Trump issued Executive Order 13827 (E.O.) prohibiting transactions within the U.S. that involve any digital currency issued by, for, or on behalf of the Venezuelan government since January 9, and authorizing the U.S. Treasury Department to “employ all powers” necessary to carry out the E.O.’s provisions. President Trump issued the E.O. in conjunction with E.O. 13692 and E.O. 13808 and because of recent steps taken by Venezuelan President Maduro to “circumvent U.S. sanctions” by issuing a digital currency that the Venezuelan legislature “denounced as unlawful.” The E.O. took effect on March 19 at 12:15 p.m. EDT.
On the same day, the Treasury’s Office of Foreign Assets Control (OFAC) announced additional sanctions pursuant to E.O. 13692 against four current or former Venezuelan government officials as part of “ongoing efforts to highlight the economic mismanagement and endemic corruption that have been the defining features of the Maduro regime.” Pursuant to OFAC’s sanctions, all assets belonging to the designated persons within U.S. jurisdiction are blocked, and U.S. persons are “generally prohibited” from participating in transactions with these individuals. OFAC also published answers to several related FAQs concerning President Trump’s E.O., as well as new FAQs related to virtual currency.
Visit here for additional InfoBytes coverage on Venezuelan sanctions.
Houston-based energy company sues former Venezuelan government officials for bribery related conduct related to national oil company
On February 16, 2018, a Houston-based energy corporation that formally dissolved in May 2017 filed suit in the Southern District of Texas against two former presidents of a Venezuelan national oil company and others who allegedly worked for them. According to the complaint filed by the energy company, Venezuela’s Ministerio del Poder Popular de Petroleo y Mineria twice refused to allow the company to sell energy assets co-owned with the oil company because the energy company refused to pay bribes requested by the defendants. According to the energy company, the denials forced the company to sell the same assets at a loss of $470 million. The energy company has sued the defendants alleging civil violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Sherman Act, the Robinson-Patman Act, and the Texas Free Enterprise and Antitrust Act.
This suit was filed days after the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at the oil company. Previous FCPA Scorecard coverage of the ongoing DOJ and ICE-HIS investigation into bribery at the national oil company can be found here.
DOJ unseals charges against former Venezuelan government officials for money laundering and FCPA violations in state-owned energy company scheme
On February 12, the DOJ unsealed charges against five former Venezuelan government officials for their involvement in a money laundering scheme at Venezuela’s state-owned energy company. The five defendants are each charged with conspiracy to commit money laundering. Two defendants are also charged with conspiracy to violate the FCPA.
Four of the defendants were arrested in Spain in October 2017 on arrest warrants based on an indictment filed in the Southern District of Texas last August. One has been extradited from Spain, while the others are pending extradition.
The indictment alleges that the five defendants possessed significant influence within the company, which permitted them to solicit vendors for “bribes and kickbacks in exchange for providing assistance to those vendors in connection with their [company] business.” The company vendors included residents of the U.S. and vendors who owned U.S.-based businesses. According to the indictment, two company vendors transferred more than $27 million to accounts in Switzerland that were connected to two of the defendants. The two company vendors previously pleaded guilty in the Southern District of Texas to FCPA charges related to the bribery of company officials.
The charges are part of an ongoing investigation by the DOJ and ICE-HSI into bribery at the company, which has resulted in charges against fifteen individuals, ten of whom have pleaded guilty.
OFAC updates Venezuela-related FAQs, addresses new debt prohibitions
On February 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the release of updated FAQs to provide additional guidance on debt-related prohibitions outlined in Executive Order 13808 (E.O. 13808). Specifically, under E.O. 13808, U.S. persons (along with persons within the U.S.) are prohibited from “engaging in transactions related to, providing financing for, or otherwise dealing in new debt” with maturities longer than 90 days for Venezuela’s state-owned oil company or 30 days for other segments of the Government of Venezuela. “New debt” is defined as debt created on or after August 25, 2017, which includes the extension of credit for the sale of goods or services. OFAC cautioned that receiving payments outside of the stipulated maturity payments is generally prohibited. The FAQs also address the handling of certain late payments related to new debt incurred by the state-owned oil company or the Government of Venezuela.
See here for previous InfoBytes coverage of Venezuelan sanctions.
OFAC releases updated Venezuela-related FAQs
On January 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the release of updated FAQs to address the prohibition of United States persons from purchasing or dealing in the Venezuelan government’s proposed digital currency under Executive Order 13808.
See here for previous InfoBytes coverage of Venezuelan sanctions.
OFAC expands Venezuelan and Iranian sanctions
On January 5, the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed additional sanctions against four current or former officials of the Venezuelan government. The designations, issued pursuant to Executive Order 13692, identify officials who are “associated with corruption and repression in Venezuela” and have “forsaken the professional republican mission of the military institution, which . . . is to be ‘with no political orientation … and in no case at the service of any person or political partisanship.’” All assets belonging to the identified individuals subject to U.S. jurisdiction are frozen, and U.S. persons are generally prohibited from dealing with them. See here for previous InfoBytes coverage of Venezuelan sanctions.
Separately on January 4, OFAC designated five Iranian entities, pursuant to Executive Order 13382 (E.O. 13382), for their ties to Iran’s ballistic missile program. The five entities identified in the designation are either owned or controlled by an Iranian group that is “responsible for the development and production of Iran's solid-propellant ballistic missiles, is listed in the Annex to E.O. 13382 and is currently sanctioned by the U.S., UN, and EU.” In addition to freezing assets subject to U.S. jurisdiction and prohibiting U.S. persons from engaging in transactions with the entities, “foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the entities designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.” See here for previous InfoBytes coverage of Iranian sanctions.
OFAC Sanctions Ten Additional Venezuelan Officials Connected to Venezuela’s Electoral Process
On November 9, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against ten current or former officials of the government of Venezuela for “undermining electoral processes, media censorship, or corruption in government-administered food programs in Venezuela.” The designation follows October 15, 2017 state elections in Venezuela, which were “marked by numerous irregularities that strongly suggest fraud helped the ruling party unexpectedly win a majority of governorships.” Under the sanctions, issued pursuant to Executive Order 13692 (see previous InfoBytes coverage here), all assets belonging to the identified individuals subject to U.S. jurisdiction are frozen, and U.S. persons are prohibited from having any dealings with them.
See additional InfoBytes coverage on previously issued Venezuelan sanctions here and here.
Florida Energy Company Owner Pleads Guilty to Conspiracy to Violate the FCPA in Venezuelan Bribery Scheme
On October 11, the DOJ announced that the co-owner of several Florida-based energy companies pleaded guilty to FCPA charges that he conspired to bribe foreign officials in exchange for obtaining contracts from a Venezuela’s state-owned energy company. In his plea, the defendant admitted to conspiring with two other individuals from 2008 through 2014 to bribe purchasing analysts employed by the energy company through cash payments and other entertainment in order to win contracts for their companies. In total, ten individuals have now pleaded guilty in connection with the scheme.
This investigation has been a collaboration between the DOJ, ICE-HSI, and IRS-Criminal Investigation Division. Previous FCPA Scorecard coverage of the investigation can be found here.
FinCEN Issues Advisory Regarding Venezuelan Government
On September 20, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to financial institutions to warn of public corruption and money laundering related to Venezuelan government agencies and bodies. The advisory lists several red flags specific to the Venezuelan government to assist financial institutions with identifying and reporting suspicious activity to FinCEN, including, among other things, payments for government contracts made to personal accounts or to companies in a different line of business, payments made from shell corporations, and certain real estate purchases by Venezuelan government officials, primarily in south Florida and Houston, Texas.
As previously reported in InfoBytes, sanctions have recently been imposed on several Venezuelan political figures. (See previous InfoBytes coverage here and here.)
President Trump Imposes Additional Venezuelan Sanctions
On August 24, President Trump announced the issuance of new sanctions against Venezuela. Executive Order 13808 “Imposing Additional Sanctions with Respect to the Situation in Venezuela,” adds additional restrictions to those declared in Executive Order 13692. The sanctions prohibit transactions related to the following:
- “new debt with a maturity of greater than 90 days” in conjunction with the Venezuelan state-owned oil and natural gas company (state-owned company);
- “new debt with a maturity of greater than 30 days, or new equity, of the Government of Venezuela, other than debt” in conjunction with the state-owned company;
- “bonds issued by the Government of Venezuela prior to the effective date of this order”;
- “dividend payments or other distributions of profits to the Government of Venezuela from any entity owned or controlled, directly or indirectly, by the Government of Venezuela;
- “[t]he purchase, directly or indirectly, by a [U.S.] person or within the [U.S.], of securities from the Government of Venezuela, other than securities qualifying as new debt with a maturity of less than or equal to 90 days [for state-owned company debt] or 30 days [for other Government of Venezuela debt].”
On August 25, OFAC also issued four General Licenses containing additional provisions: (i) General License 1 imposes a wind-down period through September 24, 2017 for contracts and other agreements that were effective prior to the Executive Order's effective date; (ii) General License 2 authorizes certain transactions involving a specifically listed holding company; (iii) General License 3 authorizes dealings in certain specified Government of Venezuela-related bonds that would otherwise be prohibited; and (iv) General License 4 allows new debt transactions related to “the provision of financing for, and other dealings in new debt related to the exportation or reexportation, from the [U.S.] or by a U.S. person . . . of agricultural commodities, medicine, medical devices, or replacement parts and components for medical devices,” provided compliance with the outlined requirements and limitations. OFAC also published answers to several related frequently asked questions concerning the additional sanctions.