The United States has reversed its 2023 relaxation of certain sanctions against Venezuela in response to failures by representatives of Venezuela President Nicolás Maduro to uphold commitments outlined in a roadmap for democratic elections in the country. This reversal demonstrates the dynamic nature of U.S. sanctions in general, the fragile nature of sanctions relief in particular, and the imperative for all impacted persons and entities to take informed action to ensure continued compliance.
This Policy Alert—which builds on a related K2 Integrity Policy Alert published in October 2023 as well as our 2023 Sanctions Year in Review—briefly summarizes the original 2023 partial relaxation of certain U.S. categories of transactions related to Venezuela. It then discusses the events that have contributed to the reversal of the partial sanctions relief, the current state of the U.S. sanctions program against Venezuela, and key considerations and recommended actions for those who had been utilizing the general licenses that have now been revoked.
Summary of Initial 2023 Partial Easing of U.S. Sanctions Against Venezuela
On 18 October 2023, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued or renewed six general licenses authorizing certain categories of transactions that previously had been prohibited under the U.S. sanctions program against Venezuela. Of these six general licenses, three extended existing authorizations, including permission for U.S. persons to trade in certain Venezuela-related bonds and equity, Most importantly, however, two new general licenses authorized broad transactions related to the gold, oil, and gas sectors of Venezuela that previously were prohibited under the U.S. sanctions program. In addition, OFAC noted issued at the time that it will no longer target for sanctions persons operating in the gold sector of the Venezuelan economy (the FAQs imply the same posture towards the oil sector).[1]
This partial relief of sanctions was a response by the U.S. government to an agreement between Venezuela’s Unitary Platform and representatives of President Nicolás Maduro that created a roadmap for democratic elections in the country.[2] At the time, the U.S. government signaled that this relaxation of sanctions could be revoked at any time if Maduro’s representatives failed to follow through on their electoral roadmap commitments, which included the reinstatement of all candidates who wanted to run for president in Venezuela and steps to release all political prisoners. Overall, however, the relaxation of sanctions aligned with the long-standing policy of the U.S. government that sanctions do not need to be permanent and can be adjusted or lifted should a sanctioned person or government change their behavior.[3]
Overview of Recent Actions Reversing the Sanctions Relief
Unfortunately, the commitments made by Maduro and his representatives under the Barbados electoral roadmap agreement were not upheld. In response to the Venezuelan Supreme Court’s decision on 26 January 2024 to disqualify the democratic opposition primary winner, combined with the arrest of members of the democratic opposition, the United States took the following actions:
- The U.S. Department of State announced on 30 January 2024 that unless progress is made in negotiations between Maduro and his representatives and the opposition Unitary Platform, it would not renew the oil- and gas-related general license (i.e., general license 44) upon its set expiration date of 18 April 2024.[4] As no progress was achieved, on 18 April 2024, OFAC revoked general license 44, and replaced it with general license 44A, allowing, through 31 May 2024, the wind down of activities previously authorized under the license.[5] As is typical for a wind-down license, OFAC has clarified in the revised FAQs that any new business or investments are not considered wind-down activities and instead persons can only use the license to complete performance under previous commitments.[6]
- Similarly, on 29 January 2024, OFAC revoked general license 43 and replaced it with general license 43A. The license had previously authorized all transactions involving Minerven, the Venezuelan state-owned gold mining company. General license 43A provided for a wind-down period of any such transactions through 13 February 2024.[7]
As a companion to these actions, OFAC issued updated FAQs on its website both to explain the changes and to further assist entities with implementing the reversals.[8]
Current State of U.S. Sanctions Program Against Venezuela
Despite the initial partial relief of sanctions in 2023, it is important to note that several sanctions restrictions were never removed against Venezuela, especially blocking sanctions against the government of Venezuela, including its state-owned entities. Now, with the reversal of the sanctions relief, persons subject to the jurisdiction of the United States once again may not engage in activities that involve Minerven or activities related to the oil and gas sector of Venezuela in the absence of another authorization. Additionally, and as a reminder, all transactions in any digital currency, digital coin, or digital token, issued by, for, or on behalf of the government of Venezuela on or after
Key Considerations and Recommended Actions
The 2023 partial relaxation of certain U.S. sanctions against Venezuela and their subsequent reversal demonstrate the dynamic and complex nature of U.S. sanctions programs. Unless the sanctions are lifted by the termination of the related national emergency declared under the International Emergency Economic Powers Act (IEEPA), all sanctions relaxations should be considered temporary, fragile, and reversible.
Individuals or entities that relied upon general licenses 43 and 44 that had been issued in 2023 and have now been revoked must take the following actions:
- Ensure that any wind down has taken place (or will take place) within the timeframe indicated in the general licenses 43A and 44A;
- For any transaction necessary to wind down that falls outside of the authorized timeframe, individuals and entities should consider requesting specific licenses;
- Ensure that all activities conducted under the general licenses 43A and 44A in fact constitute wind-down activities and not new business or investment;
- Communicate these changes properly within their organization to avoid any inadvertent transaction in breach of U.S. sanctions; and
- Be prepared to share records proving their compliance with the terms of general licenses.
Should you have any questions about the new sanctions and their impact, please contact K2 Integrity’s team of sanctions experts.
[1] U.S. Department of the Treasury’s Office of Foreign Assets Control, “Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on 18 October 2023,” as issued on 18 October 2023, available at https://ofac.treasury.gov/media/932241/download?inline.
[2] U.S. Department of State, press statement, Signing of Electoral Roadmap Between the Unitary Platform and Representatives of Maduro, 18 October 2023, available at https://www.state.gov/signing-of-electoral-roadmap-between-the-unitary-platform-and-representatives-of-maduro/.
[3] See, e.g., The Department of the Treasury, press release: “Treasury Continues Pressure on Illegitimate Regime Officials Undermining Democracy in Venezuela,” 22 September 2020, available at https://home.treasury.gov/news/press-releases/sm1132.
[4] U.S. Department of State, press release, “Venezuela: Sanctions Actions and Supporting Democracy,” 30 January 2024, available at https://www.state.gov/venezuela-sanctions-actions-and-supporting-democracy/.
[5] U.S. Department of the Treasury, press release, “Issuance of Venezuela-related General License and Associated Frequently Asked Questions,” 17 April 2024, available at https://ofac.treasury.gov/recent-actions/20240417.
[6] U.S. Department of the Treasury’s Office of Foreign Assets Control, “Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on 18 October 2023,” as amended, available at https://ofac.treasury.gov/media/932821/download?inline.
[7] U.S. Department of the Treasury, press release, “Issuance of Venezuela-related General License,” 29 January 2024, available at https://ofac.treasury.gov/recent-actions/20240129_33.
[8] U.S. Department of the Treasury’s Office of Foreign Assets Control, “Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on 18 October 2023,” as amended, available at https://ofac.treasury.gov/media/932821/download?inline.
[9] See, e.g., U.S. Department of the Treasury, Determination Pursuant to Section 1(a)(i) of Executive Order 13850, 9 May 2019, available at https://ofac.treasury.gov/sanctions-programs-and-country-information/venezuela-related-sanctions (targeting the defense and security sectors).
