On January 28, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated Petróleos de Venezuela, S.A.; effective immediately PdVSA is on OFAC’s Specially Designated Nationals and Blocked Persons List and all of its assets within U.S. jurisdiction are blocked.
Simultaneously, OFAC issued a number of general licenses intended to mitigate the impact of this designation outside of Venezuela by providing limited authorization for certain transactions and activities related to PdVSA and its subsidiaries. As a result:
- all assets of PdVSA and its direct and indirect subsidiaries owned 50% or more by PdVSA or other specially designated nationals (SDNs) (in the aggregate) within U.S. jurisdictions are now blocked and all transactions within U.S. jurisdiction involving these persons and entities are prohibited, absent a license;
- PdVSA and its subsidiaries may still service debt issued prior to August 25, 2017, and U.S. persons can continue to hold and provide services related to such debt, but transfers of such debt are now only permitted to non-U.S. persons (in other words, U.S. persons may only divest PdVSA debt, not acquire it);
- purchase and importation into the United States of petroleum and petroleum products from PdVSA is permitted until April 28, 2019, so long as all proceeds from such sales are paid into blocked, interest-bearing accounts in the United States rather than released to PdVSA;
- certain U.S.-linked PdVSA subsidiaries—including PDV Holding, Inc., CITGO Holding, Inc., and their subsidiaries—are not subject to blocking sanctions until July 27, 2019, and thus their assets are not frozen and transactions with these entities within U.S. jurisdiction remain permitted; and
- U.S. financial institutions are permitted to reject rather than block (i.e., return rather than seize) funds transfers involving PdVSA or its subsidiaries, so long as the funds transfers originated outside of the United States and both the originator and beneficiary are non-U.S. persons located outside of the United States or Venezuela, until March 29, 2019. Note that this does not authorize the processing of U.S. dollar transfers relating to PdVSA, which are now prohibited unless related to U.S.-licensed activities.
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