OFAC Designates Venezuelan State-Run Bank, Issues General Licenses

The Treasury’s Office of Foreign Assets Control sanctioned a Venezuelan state-run bank and five related entities, OFAC said in a March 22 notice, increasing pressure on the Nicolas Maduro-led regime in potentially the most impactful move against the country since January, when the U.S. sanctioned Petróleos de Venezuela, S.A, the country's state-run oil company.

The bank, Banco de Desarrollo Económico y Social de Venezuela (BANDES), has been used by Venezuelan “regime insiders” to “move funds abroad in an attempt to prop up Maduro,” Treasury Secretary Steven Mnuchin said in a statement. “Maduro and his enablers have distorted the original purpose of the bank, which was founded to help the economic and social well-being of the Venezuelan people, as part of a desperate attempt to hold onto power,” Mnuchin said.

Michael Dobson, a trade lawyer and former senior sanctions policy advisor for OFAC, said the move could be characterized as the U.S.’s strongest sanctions against Venezuela since its designation of PdVSA, but said it is still too early to gauge the full impact. “It’s a pretty significant Venezuelan financial institution,” Dobson said. “If what Treasury said is true, that the bank has significant assets in Europe, it could be very significant.” Dobson, who is now with Morrison Foerster, said companies that may be most affected by the sanctions are “Visa, Mastercard, the institutions that one would assume would have ties to a fairly large financial institution.”

OFAC also amended a general license and issued four new licenses that permit certain transactions with BANDES and related entities, according to the notice. OFAC amended General License 4 to allow certain transactions with entities related to BANDES, including those that are necessary for the “exportation or reexportation” from the U.S. or by a U.S. person “of agricultural commodities, medicine, medical devices, or replacement parts and components for medical devices to Venezuela.” General License 15 allows transactions between BANDES-related companies and “MasterCard Incorporated, Visa, American Express Company, Western Union Company and MoneyGram International” until March 22, 2020.

General License 16 allows certain transactions -- including those that are “ordinarily incident and necessary to processing noncommercial, personal remittances” -- with BANDES-related companies until March 22, 2020. General License 17 allows transactions with BANDES-related companies “that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements” until May 21, 2019. General License 18 allows certain transactions with lntegracion Administradora de Fondos de Ahorro Previsional, which is owned by a BANDES-related entity.