834. What does General License 37 authorize?
On June 18, 2020, OFAC designated pursuant to E.O. 13850, among other entities and individuals, two entities for operating in the oil sector of the Venezuelan economy and identified two vessels owned by these entities as blocked property. Concurrent with this action, OFAC issued General License (GL) 37, which authorizes U.S. persons to engage in transactions and activities prohibited by E.O. 13850, as amended by E.O. 13857 and incorporated into the Venezuela Sanctions Regulations, that are ordinarily incident and necessary to the wind down of transactions involving the blocked persons or vessels listed in paragraph (b) of GL 37 through 12:01 am eastern daylight time, July 21, 2020.
The wind-down authorization in GL 37 includes, for example, completion of ongoing voyages, including discharge of cargo aboard such vessels as of June 18, 2020; docking or anchoring of the vessels at third-country, non-sanctioned ports; transactions related to the safety and maintenance of the vessels, such as entering into contracts and paying for insurance coverage, flagging, and safety and compliance inspections; and transactions related to the health and safety of any crew, including the provision and processing of wages or other employee benefits, or other provision of crewing services.
After the expiration of this authorization U.S. persons will be prohibited from engaging in all transactions with the persons or vessels listed in paragraph (b) of GL 37 that are not exempt or authorized by OFAC. U.S. persons unable to wind down transactions with the persons or vessels listed in paragraph (b) of GL 37 before 12:01 a.m. eastern daylight time, July 21, 2020, are encouraged to seek guidance from OFAC.
Non-U.S. persons may wind down transactions with the persons or vessels listed in paragraph (b) of GL 37 without exposure to sanctions under E.O. 13850, provided that such wind-down activity is consistent with GL 37. Entering into new contracts involving the persons or vessels listed in paragraph (b) of GL 37 is not authorized under GL 37, unless such contracts are for wind-down activity authorized in paragraph (a). Non-U.S. persons unable to wind down transactions with the persons or vessels listed in paragraph (b) of GL 37 before 12:01 a.m. eastern daylight time, July 21, 2020, are encouraged to seek guidance from OFAC. [06-18-2020]
1) This FAQ is similar to other FAQs (see e.g. FAQ # 817) addressing designations of individual entities that were made in conjunction with the issuance of a wind-down license, but the FAQ is notable for its clarification of the relationship between the language of the "wind down" GL and dealings involving blocked vessels.
OFAC states that the following are within the scope of the GL:
"[the] completion of ongoing voyages, including discharge of cargo aboard such vessels as of June 18, 2020; docking or anchoring of the vessels at third-country, non-sanctioned ports; transactions related to the safety and maintenance of the vessels, such as entering into contracts and paying for insurance coverage, flagging, and safety and compliance inspections; and transactions related to the health and safety of any crew, including the provision and processing of wages or other employee benefits, or other provision of crewing services."
The implication here appears to be that the discharge of cargo placed on a vessel subsequent to the vessel being blocked is not within the scope of the standard wind-down GL, even if a U.S. person has pre-existing dealings with the vessel and/or the blocked entity that owns and operates the vessel, but see FAQ # 1101, an FAQ virtually identical in all material respects except that the discharge of cargo is authorized throughout the wind down period irrespective of the loading date.
2) Venezuela GL 37 revoked in July 3, 2020, in light of the removal of the sanctioned entities and vessels from the SDN list. (https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200702.aspx).
3) See generally Examples of Transactions Deemed to be, and not to be, Within the Scope of the Standard "Wind-down" and "Maintenance" GLs.
4) See also FAQ # 1119, another blocked vessel wind down FAQ.
5) Refer generally to General Note on "Counterfactual Secondary Sanctions and Derivative Designation Safe Harbors" in Certain OFAC Guidance and FAQs (System Ed. Note)