Venezuela Trade Sanctions
For the first time, the United States imposed sanctions against Venezuela in 2005 as a result of the lack of cooperation with American anti-narcotics and anti-terrorism efforts. Over the years, the scope of such restrictions has significantly expanded in response to growing human rights violations and the reduction of democratic institutions. Non-compliance with these rules threatens large fines and reputational losses.
Our law firm will help you navigate complex sanctions legislation, verify counterparties, and secure transactions in the Venezuelan direction. We will handle licensing, restriction analysis, and legal support so that you can successfully develop your business without worrying about potential violations.
Venezuela Trade Restrictions
In recent years, the United States has imposed a wide range of economic and trade sanctions against Venezuela, managed by the Office of Foreign Assets Control. These measures affect several key sectors of the Venezuelan economy and impact foreign partners conducting business with this country.
- Oil and gas sector
Venezuela has traditionally been one of the largest oil exporters in Latin America. At the same time, it is precisely the oil and gas industry that is at the epicenter of American sanctions. The state oil company Petróleos de Venezuela, S.A. is under strict restrictions. Any transactions with PDVSA and its subsidiaries require thorough analysis.
The supply of crude oil and petroleum products from Venezuela to the United States is possible only in limited cases (under special or temporary licenses). Import and export related to repair and technological equipment for oil production and processing are also subject to sanctions if they are connected with prohibited entities. - Financial constraints
OFAC imposed a series of financial restrictions that complicated doing business with the Venezuelan public sector and some commercial entities. American investors and companies are prohibited from purchasing debt instruments issued by the Venezuelan government or state-owned enterprises, including PDVSA bonds.
Any assets under the control of American financial institutions and associated with Venezuelan government organizations or individuals from sanctions lists must be blocked. Venezuelan state entities or individuals on sanctions lists cannot conduct dollar transactions through U.S. banks. - Sectoral sanctions
The U.S. government imposed sanctions on the export of gold from Venezuela, arguing that profits from gold support sanctioned state structures.
A number of state banks, companies, and officials are listed in the SDN sanctions lists. Cooperation with them without appropriate licenses or permits is prohibited. - Export Control
In addition to OFAC measures, export control regulations administered by the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce are also applied against Venezuela.
Technologies and equipment that can be used for both civilian and military purposes require licensing when exported from the USA to Venezuela. Any supply of software and hardware included in the controlled list must comply with EAR (Export Administration Regulations) requirements.
When exporting, it is important to ensure that the end user is not included in the “Entity List” or other sanction lists. Violations may result in severe fines and even criminal liability.
Our law firm has many years of experience in the field of sanctions and international trade law. We offer comprehensive support for organizations and entrepreneurs conducting business with Venezuela, from analysis and preparation of transactions to obtaining licenses and protecting interests in case of inspections.
Regulations on Exports to Venezuela
Until May 2019, Venezuela was in Country Group D (a group of countries subject to certain restrictions, but not the most severe ones). Amendments that came into effect on May 24, 2019, moved Venezuela into a strict sanctions regime, thereby significantly complicating access to a range of items, technologies, and services controlled under EAR.
In addition to general export restrictions to Venezuela, U.S. authorities include specific companies in special lists (Entity List, SDN List, etc.) that, in their opinion, participate in violating the sanctions regime or help circumvent restrictions. Among them are Monsoon Navigation Corporation and Serenity Maritime Limited.
If your supply is in any way connected with these companies (or they are mentioned as the end user, carrier, intermediary in the supply chain), then the export, re-export, or transfer of items and technologies subject to EAR requires obtaining a special license or may even be prohibited altogether. Failure to properly vet the counterparty is fraught with fines and other liability measures.
During the tightening of export controls, BIS removed or significantly reduced a number of license exceptions previously applied to exports to Venezuela. For example, some of the following License Exceptions are now available only in a limited form: Limited Value Shipments, Shipments to Country Group B, Servicing and Replacement of Parts and Equipment. Each transaction now needs to be analyzed on an individual basis to determine whether any simplification is available or if it is necessary to apply for a license.
In addition to goods, the tightened rules also apply to the transfer of technologies — both in material form (drawings, diagrams, digital media) and immaterial form (electronic data transfer, cloud services, etc.). Some exceptions that allowed such transfers without licenses are now invalid for Venezuela.
In all cases where exported goods are subject to licensing or their value/volume exceeds established thresholds, the submission of Electronic Export Information is required. An error in submitting EEI or intentional distortion of data may be regarded as a violation of export control, which threatens fines and other administrative or criminal measures. Therefore, it is extremely important:
- Accurately specify product codes (ECCN, HTS, etc.);
- Fill in all mandatory fields — about the cost of the cargo, weight, end user, delivery route, etc.;
- Provide accurate information about the counterparty, including their address, contact details, and type of activity.
It is extremely important to check whether your end user, carrier, or any other counterparty is listed in special lists. Take into account new requirements, enter correct data into AES, and monitor changes in value and weight thresholds of goods.
Consequences of Violating Trade Restrictions
For non-compliance with OFAC requirements, significant monetary fines may be imposed. The amounts can reach millions of dollars depending on the nature and scope of the violations. Fines may be imposed on both the company and individuals involved in committing wrongful actions.
In the event of a violation of the sanctions regime, the company may face a refusal to obtain the export licenses necessary for continuing foreign economic activities.
Victims of violations can go to court with claims for compensation if they can prove that the violator’s actions led to financial losses or other damages.
In particularly severe cases of violations of the U.S. sanctions regime, criminal prosecution with actual prison terms for executives and employees involved in unlawful actions is possible. The court may appoint an external monitor (compliance monitor) for a company that has previously committed systematic or intentional violations of the sanctions regime.
Assets associated with sanctions violators (including bank accounts, real estate, and other property under U.S. jurisdiction) may be frozen by regulators. This can lead to a complete loss of access to funds and the inability to continue business operations on an international level.
Companies or individuals caught in violations may be added to the Specially Designated Nationals (SDN) or Sectoral Sanctions Identifications (SSI) lists. Being included in such lists effectively cuts the entity off from any business activity under U.S. jurisdiction and hinders cooperation with foreign counterparties who fear secondary sanctions.
Public disclosure of violations of sanction requirements deals a serious blow to the organization’s reputation. Financial institutions may refuse to provide loans or enter into new contracts if there is a risk of falling under secondary sanctions. Investors and shareholders prefer not to associate with organizations that may be involved in international scandals.
Contact OFAC Sanctions Lawyers for Venezuela
Violation of sanctions can lead to serious fines, asset freezes, criminal prosecution, and other negative consequences. Therefore, it is extremely important to secure legal support from qualified specialists as early as possible. Reliable legal support allows for the timely identification of potential threats and helps avoid the freezing of accounts and property.
A qualified lawyer will help understand which transactions are permitted, which require obtaining a license, or are completely prohibited. Only an experienced team of specialists with expertise in several areas is capable of providing balanced recommendations and offering reliable legal solutions.
Our team is ready to study your business model, conduct a due diligence of counterparties, and identify potential violations of sanction requirements. We will prepare a package of internal regulations and instructions to avoid sanction violations in daily transactions and operations. We will set up a system for continuous monitoring to respond promptly to changes in sanction lists.
If necessary, our specialists will help obtain special OFAC licenses for individual transactions or cooperation. We will represent your interests in U.S. government agencies and during regulatory inspections. We will provide legal support if investigations are initiated against your company or its executives on suspicion of sanctions violations. We will develop an effective defense strategy and minimize possible consequences, including financial sanctions and reputational risks.
Contact us right now for an initial consultation and comprehensive legal support on U.S. sanctions regime issues. Our team of experts will analyze your specific situation, develop a compliance strategy, and ensure safe operations in the Venezuelan market.
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