Yesterday, OFAC published the following 2 new Frequently Asked Questions (FAQs) for the Venezuela-related sanctions program:
553. For purposes of E.O. 13808, what is “new debt”?
OFAC considers “new debt” to be debt created on or after August 25, 2017. See FAQ 511 for examples of “debt,” which includes loans and extensions of credit.
OFAC does not consider debt that was created prior to August 25, 2017 to be “new debt” for purposes of E.O. 13808 so long as the terms of the debt instrument (including, for example, the length of the repayment period or any interest rate applied) agreed to by the parties do not change on or after August 25, 2017. Such preexisting debt does not need to conform to the 30- or 90-day tenors imposed under E.O. 13808, and U.S. persons may collect and accept payment for such debt regardless of whether the relevant segment of the Government of Venezuela, including PdVSA, pays during the agreed-upon payment period. [02-12-2018]
554. For debt created on or after August 25, 2017, are U.S. persons permitted to accept payment from PdVSA or other segments of the Government of Venezuela if payment for a debt is not received within the applicable period specified in E.O. 13808 (90 days for PdVSA, 30 days for other segments of the Government of Venezuela)?
No, absent a specific license or other authorization from OFAC. As explained in FAQ 553, debt – which includes extensions of credit for sales of goods or services – created on or after August 25, 2017 constitutes “new debt,” and E.O. 13808 prohibits U.S. persons and persons within the United States from engaging in transactions related to, providing financing for, or otherwise dealing in new debt with a maturity of longer than 90 days for PdVSA or 30 days for other segments of the Government of Venezuela. Because receiving payments outside of these specified maturity periods generally constitutes a prohibited dealing in debt, U.S. persons should ensure that payment terms accord with the applicable debt prohibition.
In circumstances where PdVSA or another segment of the Government of Venezuela fails to pay a debt in full within 90 or 30 days, as applicable, U.S. persons must obtain a specific license from OFAC before accepting payment after the expiration of the applicable period.
To mitigate potential harm to U.S. persons who have not received payment related to new debt incurred by PdVSA or another segment of the Government of Venezuela within the applicable maturity period, OFAC will, on a case-by-case basis, grant specific licenses to U.S. persons to deal in the collection or receipt of such payment, provided that: (1) PdVSA or another segment of the Government of Venezuela is in debt to the applicant based on an agreement that complies with applicable sanctions requirements and prohibitions; (2) the debt is “new debt” created before March 14, 2018; (3) the relevant segment of the Government of Venezuela failed to pay its debt within the agreed-upon, authorized payment period; and (4) the transaction is not otherwise prohibited under E.O. 13808, E.O. 13692, or any part of 31 C.F.R. Chapter V.
License applications involving circumstances that do not meet these criteria will be reviewed on a case-by-case basis with a presumption of denial, with the exception of activity that is in U.S. national security or foreign policy interests, including humanitarian-related transactions, legal services, or personal communication-related services.
Consistent with FAQ 553, debt created prior to August 25, 2017 – including extensions of credit related to goods or services provided to PdVSA or another segment of the Government of Venezuela – would not constitute “new debt,” provided that the parties do not change the terms of the debt. [02-12-2018]
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