General License No. 56 - OFAC: Authorization of Strategic Negotiations.

On April 14, the Office of Foreign Assets Control ("OFAC") of the United States Treasury Department issued General License No. 56 ("LG 56"). This measure authorizes natural and legal persons from the United States. US to negotiate and sign trade agreements with the Government of Venezuela (including government agencies, the Central Bank of Venezuela and PDVSA). However, this opening is strictly preparatory and prohibits any immediate flow of capital or transfer of assets.

What do you have to know?

• The subscription of contingent contracts whose requirements and operational validity depend solely on a specific authorisation of OFAC is authorised. The signature is legally valid, but does not grant enforcement rights.
• The scope of the licence covers the signing of memorandums of understanding (MOU), agreements in principle, proposals in public tenders and deferred execution contracts, but prohibits the performance of any obligation or performance of the contract without prior authorization.

What is NOT authorized?

• Transactions involving individuals or entities from Russia, Iran, Cuba, North Korea, including entities under their control or in joint ventures.
• Transactions with (Venezuelan or American) entities that are owned, controlled or involved in groups with individuals or entities of the People's Republic of China.
• No payments called physical gold, cryptomonedas issued by the Government of Venezuela, or debt swaps are allowed.
• No transactions related to Venezuelan bonds are allowed, or the sale, transfer or taxation of PDVSA shares or any entity where the state has a 50% or more share.

Preparation window

The LG 56 has immediate effect from its date of issue. It allows companies to earn legal and administrative time, but it does not generate revenue or real operativity until OFAC issues a specific or subsequent general execution license.