CIRCULAR REF: 2019/019CIRCULATED TO ALL MEMBERS, BROKERS AND DIRECTORS BackgroundOn 5 August 2019, the United States (US) administration increased its sanctions programme against the Government of Venezuela, when President Trump issued Executive Order 13884. This Executive Order essentially blocks all property in the US of the Government of Venezuela, and prohibits US persons from engaging in any transaction with the Government of Venezuela. However, on the same day, a number of General Licenses were issued, which apply directly to US persons. These include:(a) General License 28 which gave US persons until 4 September 2019 to wind-down their operations, contracts or other agreements, involving the Government of Venezuela. The Government of Venezuela, for these sanction purposes includes all government agencies and any entity owned or controlled, directly or indirectly, by the Venezuelan Government or its agencies including PdVSA.(b) General License 30 which authorises all transactions and activities involving the Government of Venezuela that are ordinarily incident to operations or use of ports or airports in Venezuela, save where related to (a) the exportation or re-exportation of diluents, directly or indirectly, to Venezuela or (b) where otherwise prohibited.Executive Order 13884 is in addition to the sanctions provisions of Executive Order 13850 under which, among others, the oil sector of Venezuela and PdVSA are also targeted. Executive Order 13850 remains in effect.Trade with PdVSA or Venezuela’s oil sectorWithout pre-authorisation from the US Treasury Office of Foreign Assets Control (OFAC), all US persons will continue to be prohibited from engaging in any dealings with PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest. In addition, non-US persons could be subject to designation under Executive Order 13850, as amended, for operating within the oil sector of the Venezuelan economy, or for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of PdVSA, including the exportation or re-exportation of diluents to PdVSA.Potential enforcement against US and non-US personsThe legal position of US persons trading with Venezuela or Venezuelan interests is clearer than it is for non-US persons who face less certainty. US policy towards Venezuela is opaque, potentially fast moving and subject to change and there is a significant risk that new measures or sanctions may be introduced, with little or no forewarning from the US administration.The US administration has, however, made it clear via various media, including tweets from senior White House advisors, as well as more conventional routes through State Department and US Treasury announcements, that its sanctions regime on Venezuela will expand. This may expose non-US persons to a heightened risk of sanctions, if they provide material assistance to the Government of Venezuela (which is widely defined in EO 13850 and EO 13884).The effect of so-called secondary sanctions on non-US persons could result in listing as a specially designated entity (SDN), which could and is likely to result in exclusion from using the US dollar currency and banking system. Trade partners and counterparties of SDNs may find it difficult to continue with business relationships. Contracts may contain sanctions clauses, which allow parties to extricate themselves from contractual obligations, if such counterparties could or would be exposed to a risk of sanctions, potentially resulting in contractual penalties if or when contracts cannot be fulfilled.Based on past practices, there exists a strong possibility that after 4 September, being the date on which the wind-down period ended for US persons, the US authorities may turn closer attention to non-US persons if they are perceived to be providing the Venezuelan Government (including PdVSA) with material assistance. Members