On July 31, OFAC designated Venezuelan President Nicolas Maduro Moros as a “Specially Designated National” (“SDN”) blocking all of his assets and prohibiting any transaction in which he has an interest within U.S. jurisdiction. Last week, on July 26, OFAC designated 13 other current and former Venezuelan officials as SDNs, including Rocco Albisinni Serrano, who is the President of CENCOEX (the Venezuelan foreign exchange authority), and Simon Alejandro Zerpa Delgado, who is the Vice President of Finance for PDVSA and the President of Venezuela’s Economic and Social Development Bank (“BANDES”), and the President of Venezuela’s National Development Fund (“FONDEN”). There have been rumors that the United States was considering restricting oil sales from Venezuela, but at the moment no such sanctions have been imposed.
These sanctions apply to the individual officials, not to the institutions they head, so that transactions with the Government of Venezuela, PDVSA, and other relevant entities are not directly affected. However, OFAC has cautioned that persons acting within U.S. jurisdiction (for example, U.S. persons or persons engaged in U.S. dollar transactions) may not deal with the sanctioned officials at all, even in their official capacities. Thus, those acting within U.S. jurisdiction may not negotiate with sanctioned officials or enter into agreements signed by sanctioned officials. They also must ensure that the institutions controlled by the sanctioned persons are not acting for the benefit of a sanctioned person. (For example, the Venezuelan government could not sell a Miami penthouse owned by a sanctioned person on his behalf.) If, however, the transaction does not involve any participation of the sanctioned official, dealings with the institution in which he or she holds a position are unrestricted.
Experience with prior circumstances in which a senior official of a non-sanctioned entity was designated for sanctions indicates that the most difficult questions are likely to arise when the senior official has an indirect role in approving or executing a transaction. Obviously, to the extent the sanctioned official is the chief executive, it is inevitable that the persons executing a transaction on behalf of the entity will report to the sanctioned person. However, where the sanctioned official has some identifiable, specific role in approving a transaction within U.S. jurisdiction, the precise boundaries of OFAC’s interpretation of the prohibition are unclear, and advice should be sought on the particular facts and circumstances.
Please feel free to raise any question or concern you may have with any of your regular contacts at the Firm, or with Paul Marquardt in our Washington office.