US expands Venezuela sanctions
The US Treasury Department’s Office of Foreign Assets Control (OFAC) has sanctioned TNK Trading International, a subsidiary of the Russian energy company Rosneft, based on Executive Order 13850, authorising sanctions on persons operating in certain sectors of the Venezuelan economy, including the oil sector.
OFAC sanctioned TTI for trading, processing, and transporting unrefined petroleum and petroleum products from Venezuela. OFAC also sanctioned TTI because following February 18, 2020 sanctions on Rosneft Trading, another subsidiary of Rosneft, certain cargoes of Venezuelan oil allocated to RTSA were changed to TTI in order to evade OFAC Sanctions.
In addition, OFAC issued three Venezuela-related general licences: General License 15C, “Authorizing Transactions Involving Certain Banks for Certain Entities,” General Licence 16C, “Authorizing Maintenance of US Person Accounts and Noncommercial, Personal Remittances involving Certain Banks,” and General Licence 36A, “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading or TNK Trading International.
General Licence 36A authorises US persons to engage in transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving TTI or RTSA, through 12:01 a.m. eastern daylight time, May 20, 2020.
Lastly, OFAC issued new guidance clarifying that non-US persons may wind down transactions with TTI or RTSA without exposure to sanctions under Executive Order 13850, provided that such wind-down activity is consistent with General License 36A; non-US persons unable to wind down their activities with TTI or RTSA before 12:01 a.m. eastern daylight time, May 20, 2020, may seek OFAC’s additional guidance; entering into new business involving TTI or RTSA is not wind-down activity under General Licence 36A.
According to law firm Diaz Reus & Targ, the consequences of these additional sanctions is that OFAC has added TTI to the List of Specially Designated Nationals and Blocked Persons. Accordingly, all of TTI’s property within or transiting U.S. jurisdiction is blocked. In addition, if they are not authorised by a licence issued by OFAC such as General License 36A, US persons or foreigners that conduct business in or with the US, US persons, or using US-origin goods or services are prohibited from engaging in transactions with TTI or with entities in which TTI has, directly or indirectly, a 50 per cent or greater ownership interest.
OFAC also added TTI to the Sectoral Sanctions Identifications List to make any transaction with TTI that remains authorized under General License 36A subject to Ukraine-/Russia-related Directives 2 and 4.
Under these directives, OFAC prohibits US persons from engaging in all transactions in, provision of financing for, and other dealings in new debt of longer than 60 days maturity for designated Russian companies as well as any entities 50-per cent or more owned by those entities.
OFAC also prohibits US persons from providing goods, services (except financial services), or technology in support of projects for exploration or production of oil from deepwater, Arctic offshore, or shale that are (i) located in Russia and involve designated Russian companies; (ii) located elsewhere if designated Russian entities or their subsidiaries own a 33 per cent or greater ownership interest, or a majority of the voting interests.
US and foreign persons violating OFAC Sanctions on Venezuela and Russia may face significant civil and criminal penalties. OFAC may also add them to its SDN List (secondary sanctions).
