OFAC issues Venezuela G/L and FAQs for Creditors

The Department of the Treasury's Office of Foreign Assets Control (OFAC) announced today the issuance of Venezuela General License 42, which authorizes certain transactions relating to the negotiation of settlement agreements with the IV Venezuelan National Assembly, its Delegated Commission, IV National Assembly Entities, and other designated persons.

Concurrently, OFAC has published three new Frequently Asked Questions (1123, 1124, 1125)  and amended a previously existing FAQ (808).

General License 42 permits transactions "ordinarily incident and necessary to the negotiation of settlement agreements" with specific Venezuelan parties, including the IV National Assembly, its Delegated Commission, an IV National Assembly Entity, or a person appointed or designated by an IV National Assembly Entity. The license relates to debts owed by the Government of Venezuela, its state-owned oil company PdVSA, and entities in which PdVSA holds an ownership interest.

However, the newly issued General License does not authorize the entry into settlement agreements, whether contingent or otherwise. Parties that have successfully negotiated a settlement agreement under the provisions of General License 42 must seek a separate, specific license from OFAC to finalize the agreement.

Furthermore, the license does not authorize transactions or negotiations with persons blocked pursuant to the Venezuela Sanctions Regulations (VSR) other than those explicitly listed in the license, unless separately authorized.

OFAC's non-enforcement policy applies only to its own sanctions and does not exempt individuals or entities from complying with any other applicable regulatory requirements, reviews, or approvals necessary to finalize a sale. As stated in FAQ 1125, parties that have negotiated a settlement agreement under General License 42 must still obtain a specific license for entry into that agreement.

In addition, FAQ 808 clarifies that a specific OFAC license is not required to initiate or continue U.S. legal proceedings against a person designated or blocked under the VSR, nor is a license required for a U.S. court or its personnel to hear such a case. Creditors may file for writs of attachment without OFAC authorization for matters involving property blocked under the VSR.

The issuance of General License 42 and the publication of new and amended FAQs signal the U.S. government's continued efforts to address the complex situation in Venezuela and provide guidance to individuals and entities navigating the country's economic and political landscape.

The U.S. will not block a court auction of shares in oil refiner Citgo Petroleum Corp's parent, Justice Department officials told a federal court April 30, paving the way for a potential seizure by creditors of Venezuela's most-prized foreign asset.