On March 8 President Obama signed Executive Order 13692 Executive Order 13692, which initially adds seven former or current Venezuelan government officials to OFAC’s Specially Designated Nationals (SDN) List. Once they have been added to the SDN list, the law prohibits any U.S. entity from doing business with them (or entities owned or controlled by them) in addition to freezing their assets and suspending their U.S. entry visas. The move comes months after Congress granted President Obama the power to impose sanctions by passing “The Venezuela Defense of Human Rights and Civil Society Act of 2014” late last year in response to the Venezuelan government’s violent crackdown on anti-government protests that began in February 2014, when 43 people were killed and more than 3,000 arrested. The additions to the SDN list come amid continually worsening economic and social conditions within the country that have been exacerbated by falling oil prices and food shortages. The individuals targeted by the sanctions are said to have committed human rights violations and participated in corruption.
After strongly condemning the United States’ decision to impose sanctions on his country’s government, Venezuelan President Nicolas Maduro sought the power to rule the country by decree. On March 15, Venezuela’s parliament approved the President’s request – a development that, along with President Maduro’s consistent and fiery anti-American rhetoric, suggests US-Venezuela relations will likely get worse before they get better.
The Bottom Line: These initial sanctions are limited to the seven individuals added to the SDN list. They do not include any type of overarching sanctions that would prohibit U.S. entities from exporting to the country or receiving imports from Venezuelan businesses (such as the broader programs in force against Iran and Cuba). Nevertheless, those that are doing business with Venezuela must run the names of their business partners against the SDN list to ensure that they are not one of the seven prohibited parties. Additionally, the ban on doing business imposed on individuals on the SDN list also applies to entities that are owned or controlled by those individuals, so U.S. companies must also ensure that a prohibited party is not involved in ownership or management of the entity they seek to do business with. Finally, it is important to keep in mind that such programs are in constant flux, so additions to the list may be made at any time or a new Executive Order could expand the sanctions program more substantially.