JLF Navigation

October 3, 2017

OFAC Clarifies “Profit” under New Venezuela-Related Sanctions

Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) published an FAQ explaining what constitutes “profit” for purposes of subsection 1(a)(iv) of the recent Venezuela-related Executive Order (E.O) issued by President Trump (Executive Order 13808).  (The subsection prohibits U.S. persons or those within the U.S. from engaging in transactions involving dividend payments or other distributions of profits to the Government of Venezuela by any entity owned or controlled, directly or indirectly, by the Government of Venezuela.)  The FAQ confirms, among other things, that transactions involving the Government of Venezuela (including PDVSA) related to payments for goods and services, taxes, or royalties are not considered “profit.” The FAQ also states that principal and interest payments related to bonds and promissory notes are not considered “distributions of profit” (for purposes of subsection 1(a)(iv)); therefore, U.S. persons are not prohibited from making such payments, provided that such payments are not prohibited by other provisions in the E.O.