International efforts to seize assets of sanctioned Russian oligarchs and dispose of them in a timely fashion continue to face obstacles. Among these assets are the TANGO and AMADEA, two superyachts that were seized in the spring of 2022. More than a year and a half later, the TANGO and AMADEA are stuck in legal limbo. Taxpayers fund the staggering cost of upkeep, which (for full upkeep) can per annum be ten percent of a yacht’s total value. The costs include wages for a skeleton crew, insurance, docking fees, diesel supply and general maintenance.  Licenses from multiple jurisdictions are often needed to process transactions relating to a frozen asset, making payment for these services even more complicated and time consuming. 

Continue Reading Superyacht seizures and financing risk associated with sanctions

We are conducting a short, anonymous survey to find out your thoughts on sustainable fuel sources in the transportation industry, including your understanding of the various options, potential challenges, and expected timings for full conversion to sustainable fuel sources. Please take 5 minutes to complete the survey.

We know this topic is top of mind for many of our trade clients, particularly with the increasing focus on decarbonization in supply chains and the EU’s Carbon Border Adjustment Mechanism (CBAM).

We look forward to sharing the results of this survey in a report in the next few months.

After many rumors of potential changes to the U.S. policy on Venezuela, on October 18, 2023 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued four general licenses, representing a significant shift in its Venezuela sanctions program.  Most pertinent for the shipping industry, certain sanctions that were in place against Petróleos de Venezuela, S.A. (PdVSA) and the Venezuela oil, gas and mining sectors have now largely been relaxed.

Specifically, OFAC issued:

  • General License 44, a six-month general license temporarily authorizing transactions that are related to oil and gas sector operations in Venezuela, including authorizing ordinarily incident and necessary financial transactions with certain blocked Venezuelan banks related to the oil and gas sector, specifically including transactions involving PdVSA.
    • The license will be renewed only if Venezuela meets its commitments under the electoral roadmap as well as other commitments with respect to those who are wrongfully detained. 
  • General License 43, authorizing certain transactions involving CVG Compania General de Mineria de Venezuela CA, the Venezuelan state-owned mining company designated pursuant to Executive Order 13850.
    • The U.S. government does not intend to sanction any person solely for legitimate operations in the gold sector of the Venezuelan economy.

GL 44 suspends Venezuela-related sanctions applicable to most oil and gas sector operations in Venezuela, including the sale of oil and gas from Venezuela to the United States and other jurisdictions, as well as the payment of taxes, royalties, costs, fees, dividends, and profits related to oil and gas sector operations or transactions involving PdVSA or any entity in which PdVSA owns a 50% or greater interest.

GL 44 provides a non-exhaustive list of transactions covered by the authorization, including:

  1. The production, lifting, sale, and exportation of oil or gas from Venezuela, and provision of related goods and services
  2. The payment of invoices for goods or services related to oil or gas sector operations in Venezuela
  3. New investment in oil or gas sector operations in Venezuela
  4. The delivery of oil and gas from Venezuela to creditors of the Government of Venezuela, including creditors of PdVSA entities, for the purposes of debt repayment

Note: While these authorizations are addressed to “U.S. persons,” it is well established OFAC policy that authorizations issued for U.S. persons are also deemed to extend to non-U.S. persons.  Therefore, non-U.S. operators would also be able to benefit from these authorizations to the extent their activities comply with GL 44. 

While GL 44 provides broad relief to oil and gas sector operations in Venezuela, several key prohibitions remain in place:

  • Designated financial institutions.  GL 44 does not authorize any transactions involving any financial institution blocked pursuant to EO 13850 other than Banco Central de Venezuela or Banco de Venezuela SA Banco Universal.
  • Russia-related operations.  GL 44 does not authorize the provision of goods or services to, or new investment in, an entity located in Venezuela that is owned or controlled by, or in a joint venture with, an entity located in the Russian Federation.  In addition, GL 44 does not authorize any transactions related to new investment in oil or gas sector operations in Venezuela by a person located in Russia or any entity owned or controlled by a person located in the Russia.
  • Certain financial restrictions in EO 13808.  Transactions prohibited by subsections 1(a)(i) – (iii) or 1(b) of EO 13808,[1] other than the payment of invoices for goods or services related to oil or gas sector operations in Venezuela, or the delivery of oil and gas for the purpose of debt repayment to creditors, are still prohibited.
    • Accordingly, new debt transactions, such as the provision of loans to PdVSA, that are not for the payment of invoices or repayment of debt through delivery of oil or gas, are not authorized by GL 44. See FAQ 553 for a definition of “new debt” under EO 13808 and FAQ 511 for examples of debt and equity
  • Transactions prohibited by EOs 13827 and 13835.  GL 44 does not authorize any transactions prohibited by EO 13827 (relating to certain virtual assets issued by, for, or on behalf of the Government of Venezuela) or EO 13835 (relating to debt that is owed to the Government of Venezuela, as well as certain transactions involving any equity interest in any entity in which the Government of Venezuela has a 50% or greater ownership interest).
  • Blocked property.  GL 44 does not authorize the unblocking of any property blocked pursuant to the Venezuela Sanctions Regulations (VSR).  Accordingly, all property blocked pursuant to the VSR in the United States, or in the possession or control of a U.S. person, as of October 18, 2023, will remain blocked unless separately authorized.
  • Blocked personsTransactions involving any person blocked pursuant to a sanctions authority other than the VSR are not authorized pursuant to GL 44.

While less relevant to the shipping industry, the October 18 relaxation of U.S. Venezuela sanctions also saw the amendment of certain existing licenses to remove the secondary trading ban on certain Venezuelan sovereign bonds and PdVSA debt and equity.  More specifically, General License 3I and General License 9H remove the secondary market trading bans on purchases of certain Venezuelan sovereign bonds and pre-2017 bonds or equity issued by PdVSA.  The ban on trading in the primary Venezuelan bond market remains in place.

Per the newly published FAQ 662:

  • GL 3I authorizes U.S. persons to engage in all transactions related to, the provision of financing for, and other dealings in the bonds specified in the annex to GL 3I (GL 3I Bonds) that would be prohibited by subsection 1(a)(iii) of EO 13808 or by EO 13850, as amended by EOs 13857 and 13884 (as collectively incorporated into the VSR, 31 CFR part 591).  
  • The authorization in GL 3I includes, for example, engaging in transactions related to the receipt and processing of interest or principal payments, and acting as a custodian for U.S. and non-U.S. persons’ holdings in GL 3I Bonds.  GL 3I also authorizes divestment of the GL 3I Bonds, including, on or after October 18, 2023, to other U.S. persons.
  • GL 3I authorizes all transactions prohibited by subsection 1(a)(iii) of EOs 13808 or 13850, as amended by EOs 13857 and 13884, that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in the GL 3I Bonds, provided such trades were placed prior to 4 p.m. Eastern Standard Time on February 1, 2019.
    • This authorization aims to ensure that trades that were placed prior to February 1, 2019, are allowed to settle in the ordinary course.
  • GL 3I authorizes all transactions related to, the provision of financing for, and other dealings in bonds that were issued both (i) prior to August 25, 2017, and (ii) by U.S. person entities owned or controlled, directly or indirectly, by the Government of Venezuela, other than PDV Holding, Inc., CITGO Holding, Inc., and any of their subsidiaries, that would be prohibited by EO 13808 or EO 13850, each as amended, or by EO 13884.

The other newly issued FAQ 661 clarifies that:

  • GL 9H authorizes U.S. persons to engage in all transactions prohibited by subsection 1(a)(iii) of EO 13808 or by EO 13850, as amended by EOs 13857 and 13884, as collectively incorporated into the VSR, that are ordinarily incident and necessary to dealings in any debt of, or equity in, PdVSA, or any entity directly or indirectly owned 50% or more by PdVSA, that was issued prior to August 25, 2017 (PdVSA Securities). 
    • This includes bonds issued by PDV Holding, Inc. and CITGO Holding, Inc., or any of their subsidiaries.  The authorization in GL 9H includes, for example, engaging in transactions related to the receipt and processing of interest or principal payments, and acting as a custodian for U.S. and non-U.S. persons’ holdings in PdVSA Securities. 
    • GL 9H also authorizes divestment of the PdVSA Securities, including, on or after October 18, 2023, to other U.S. persons.
  • GL 9H authorizes all transactions prohibited by subsection 1(a)(iii) of EO 13808 or by EO 13850, as amended by EOs 13857 and 13884, that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in PdVSA Securities, provided such trades were placed prior to 4 p.m. Eastern Standard Time on January 28, 2019.

Finally, OFAC issued amended General License 5M, which further delays the effectiveness of the original authorization in General License 5 until January 18, 2024.  Between October 24, 2019 and January 18, 2024 (the date the authorization in GL 5M becomes effective), there is no authorization in effect that licenses against subsection 1(a)(iii) of EO 13835 applicable to the holders of the PdVSA 2020 8.5 percent bond.  Practically this means that, during such period, transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited, unless specifically authorized by OFAC.  For the background to the scope of the original authorization, see FAQ 595.

Please be aware that to the extent an agreement may be reached on proposals to restructure or refinance payments due to the holders of the PdVSA 2020 8.5 percent bond, additional licensing requirements may still apply.  In this regard, OFAC encourages parties to apply for a specific license, which will be subject to a favorable licensing policy when reviewing such an agreement. 

For further detail on what has changed vis-à-vis the U.S. Venezuela sanctions with the October 18 action, please consult the “Frequently Asked Questions Related to the Suspension of Certain U.S. Sanctions with Respect to Venezuela on October 18, 2023” guidance document or contact the Reed Smith sanctions team with any specific legal queries.  


[1] These subsection 1 prohibitions of EO 13808 state that (a) all transactions related to, provision of financing for, and other dealings in the following by a U.S. person or within the United States are prohibited: (i) new debt with a maturity of greater than 90 days of PdVSA; (ii) new debt with a maturity of greater than 30 days, or new equity, of the Government of Venezuela, other than debt of PdVSA covered by subsection (a)(i); and (iii) bonds issued by the Government of Venezuela prior to August 24, 2017; and that (b) the purchase, directly or indirectly, by a U.S. person, or within the United States, of securities from the Government of Venezuela, other than securities qualifying as new debt with a maturity of less than or equal to 90 or 30 days as covered by subsection (a)(i) or (a)(ii), respectively, is prohibited.

After Venezuela’s government and its political opposition agreed on electoral guarantees for 2024 presidential elections, the Office of Foreign Assets Control (OFAC) issued four general licenses suspending select sanctions:

  • General License 44 temporarily authorizes all transactions related to Venezuelan oil and gas sector operations, including producing, lifting, selling, and exporting oil or gas from Venezuela and new investment in oil or gas sector operations. The authorization includes transactions involving Petróleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA directly or indirectly owns a 50% or greater interest.

    The license expires on April 18, 2024. OFAC will only renew the license if Maduro’s government follows through with its commitments and continues taking measurable steps toward democratic elections in 2024.
  • General License 43 authorizes transactions involving CVG Compania General de Mineria de Venezuela CA (known as Minerven), the state-owned gold mining company.
  • General License 3I and General License 9H remove the secondary market trading bans on buying certain Venezuelan sovereign bonds, as well as pre-2017 PdVSA bonds or equity.

Although General License 44 affects the oil and gas sectors broadly, the following are still prohibited:

  • Transactions with sanctioned financial institutions, other than Banco Central de Venezuela or Banco de Venezuela SA Banco Universal
  • Providing goods or services to, or new investment in, any entity in Venezuela that is owned or controlled by, or a joint venture with, an entity in Russia
  • Transactions related to new investment in Venezuela’s oil or gas sector operations by a person located in Russia or an entity owned or controlled by a person in Russia
  • Certain financial transactions enumerated in Executive Order 13808
  • Transactions prohibited by Executive Order 13827 or Executive Order 13835
  • Unblocking property blocked under the Venezuelan Sanctions Regulations
  • Transactions with blocked persons

As with any general license, OFAC can revoke the authorizations in the interests of U.S. foreign policy or national security.

At the forefront of addressing the global challenge of climate change is the effort to reduce carbon.

In their latest podcast, Pittsburgh’s energy transactional partner, Ryan Haddad and Brussels’ international trade and customs partner, Yves Melin explore how Carbon capture, utilization, and sequestration (CCUS) and the Carbon Border Adjustment Mechanism (CBAM) could interact in the U.S. and EU. Their discussion includes:

  • Economic incentives linked to carbon capture in the U.S.
  • Conditions imposed by the CBAM on U.S. exporters of goods to the EU
  • How the CBAM incentivizes the decarbonization of industrial processes beyond the EU

The full podcast is available for listening on reedsmith.com.

The recent English Court of Appeal judgment on Mints & others v PJSC National Bank Trust & PJSC Bank Otkritie Financial Corporation [2023] EWCA Civ 1132 (“Mints”) on 6 October 2023 discussed several fundamental issues pertaining to concepts under the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”) and the secondary sanctions regulations thereunder, in particular the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Regulations”). The judgment can be found here.

Continue Reading UK Sanctions – What is “Control”?

October 12, 2023, witnessed perhaps one of the most fast-paced days since the introduction of the price cap restrictions on Russian crude oil and petroleum products almost a year ago. Namely, the G7 and Australia (the “Price Cap Coalition”) issued a joint statement, which was followed by the issuance of a maritime advisory and the first sanctions imposed by the Office of Foreign Assets Control (“OFAC”) for breach of the Russian oil price cap. As we are nearing the one-year anniversary of the price cap, this should serve as an important reminder to operators across the industry that enforcement will be coming.

Continue Reading A little less conversation, more action

As a follow-on to last week’s quint-seal guidance, the Bureau of Industry and Security (BIS) published best practice guidance to help prevent high-priority items from being diverted to Russia. The latest guidance focuses on exports of the following high-priority items to counterparties in countries outside the Global Export Controls Coalition (GECC):[1]

HS CodeHS Description and Representative Part
8542.31Electronic integrated circuits: Processors and controllers, whether or not combined with memories, convertors, logic circuits, amplifiers, clock and timing circuits, or other circuits
8542.32Electronic integrated circuits: Memories
8542.33Electronic integrated circuits: Amplifiers
8542.39Electronic integrated circuits: Other
8517.62Machines for the reception, conversion and transmission or regeneration of voice, images, or other data, including switching and routing apparatus
8526.91Radar apparatus, radio navigational aid apparatus and radio remote control apparatus: Radio navigational aid apparatus
8532.21Other fixed capacitors: Tantalum capacitors
8532.24Other fixed capacitors: Ceramic dielectric, multilayer
8548.00Electrical parts of machinery or apparatus, not specified or included elsewhere in chapter 85

BIS recommends that exporters ask counterparties for a signed export control certification that includes the following information:

  • Customer’s full name, address, website, and role (e.g., purchasers, intermediate consignee, ultimate consignee, end user).
  • Activity the customer intends to take with the item (e.g., consumed, transformed into a different item, maintained for stock, resold, etc.).
  • Name and address of the known end user (if not the customer).
  • List of items covered by the transaction.
  • Customer confirmation that the item requires a license to export or reexport to Russia or Belarus.
  • Confirmation the customer will comply with the Export Administration Regulations (EAR).
  • Confirmation the customer will flow the EAR requirements down to its customers and other parties in subsequent transactions, including:
    • Screening subsequent parties against the Consolidated Screening List before any reexport or transfer (in-country) and comply with any restrictions on the parties;
    • Not providing the item for end use by or to end users of Russia’s or Belarus’s military, intelligence, or national police;
    • Not providing the item for end use by or end users tied to nuclear weapons, chemical and biological weapons, or missiles or unmanned aerial vehicles capable of a range of at least 300 kilometers (or when such range is unknown); and
    • Not providing the item for ultimate end use in Russia or Belarus or the temporarily occupied Crimea region of Ukraine or the so-called DNR or LNR regions of Ukraine.
  • The name, title, phone number, email address, and signature of the customer’s representative making the certification.

The guidance includes a sample written certification, which can be for the exporter’s industry. Exporters can also incorporate these items into their existing customer certifications or end-user statements. Exporters should review the information provided by the customer for errors, omissions, or “red flags.”


[1] The GECC countries are 27 EU member states, Australia, Canada, Iceland, Japan, Liechtenstein, New Zealand, Norway, South Korea, Switzerland, Taiwan, the United Kingdom, and the United States.

On Saturday (September 30, 2023), new UK and EU trade sanctions tightening the restrictions on the import of Russian-origin iron and steel products will come into effect.

While certain measures are already in place in relation to a number of listed iron and steel products (Listed Iron and Steel Products) that are of Russian origin, the new measures prohibit the import (UK and EU) or purchase (EU only) of Listed Iron and Steel Products that are processed in third countries and incorporate Listed Iron and Steel Products that are of Russian origin, in order to reduce sanctions circumvention.

The UK’s Guidance on third country processed iron and steel measures (UK Guidance) explains that the new UK sanctions prohibit an import of such Listed Iron and Steel Products into the UK if it meets all of the following criteria, being that the product:

  1. is listed in Schedule 3B of the Russia (Sanctions) (EU Exit) Regulations 2019;
  2. has been “altered, transformed in any way; or subjected to any type of operation or process” in a third country (i.e., a country that is not the United Kingdom, the Isle of Man or Russia); and
  3. incorporates one or more Schedule 3B iron and steel products of Russian origin.

Importantly, given the new measures were first announced in April 2023, there are no exceptions or transitional periods for any goods caught by them.

Helpfully, the UK Guidance also contains scenarios which provide examples of how the rules may be applied in practice and sets out the tariff codes for the relevant iron and steel products caught by the new measures.

According to the UK Guidance, traders can apply for a license if they want to import banned iron and steel processed in a third country into the UK after September 30, 2023 and can refer to statutory guidance on Russia sanctions for information on license applications and penalties for sanctions violations.

In the UK Guidance, the government advises all parts of the supply chain for third country processed iron and steel imports to the UK to undertake necessary due diligence to ensure sanctions compliance and importers to include assurances regarding import origin in contractual agreements. Traders are also advised to be prepared to have documentation available to demonstrate a good’s supply chain history.

It is therefore recommended that companies potentially caught by the new measures consult the UK Guidance carefully and seek legal advice if necessary.

The EU is imposing a phased introduction of the new measures, with the restrictions being implemented in three phases – from September 30, 2023, April 1, 2024 and October 1, 2024 – depending on the specific tariff code of the imported iron and steel products.

The European Commission has issued guidance (in the form of FAQs) on documents that may be considered as sufficient evidence of the origin of the inputs. However, since the customs authorities of EU member states may require additional evidence in the event of reasonable doubt, there is discussion in the EU about the uncertainty as to how each member state is going to apply these restrictions.

On Tuesday, the U.S., UK, Australia, Canada, and New Zealand—known as the “Export Enforcement Five” or “E5”—issued joint guidance to industry and academia on how best to identify Russian export control evasion tactics. The E5 coordinates with other members of the Global Export Control Coalition (GECC) on export controls specific to Russia. In addition to the E5, the GECC countries are the 27 EU member states, Iceland, Japan, Liechtenstein, Norway, South Korea, Switzerland, and Taiwan.

The joint guidance identifies 45 six-digit Harmonized System (HS) codes containing items Russia needs for its weapons systems. When exporting goods listed in one of these HS codes, exporters are encouraged to conduct additional due diligence to ensure the end user is not attempting to evade export controls or sanctions. The HS codes are divided into four tiers based on priority:

  • Tier 1: Integrated circuits (also referred to as microelectronics)
  • Tier 2: Electronics items related to wireless communication, satellite-based radio navigation, and passive electronic components
  • Tier 3: This tier is divided into electronic and non-electronic items to provide greater clarity to the different industries that may work with these items
  • Tier 4: Manufacturing, production and quality testing equipment of electric components and circuits

As part of a company’s risk-based customer and transactional due diligence, the joint guidance outlines the following potential “red flags” that may indicate attempted export control or sanctions evasion:

  • Transactions related to payments for dual-use or defense items from a company incorporated after February 24, 2022 and located in a non-GECC country;
  • A new customer trading in Tier 1 or Tier 2 products, based in a non-GECC country, and incorporated after February 24, 2022;
  • An existing customer who only started receiving exports of Tier 1 or Tier 2 products after February 24, 2022 and is now exporting or reexporting the goods to known transshipment points;
  • An existing customer located outside the E5 who requests or receives a significant increase in Tier 1 or Tier 2 products after February 24, 2022;
  • A customer who cannot or will not provide details on banks, shippers, or third parties (e.g., end-users); intended end-use; or corporate ownership;
  • Transactions involving smaller-volume payments from the same end-user’s foreign bank account to multiple suppliers of dual-use products;
  • Parties listed as the ultimate consignee or in the “consign to” field who do not typically engage in business involving the goods being shipped (e.g., other financial institutions, mail centers, logistics companies);
  • A customer paying significantly more than the known market price for a good; or
  • A customer or address similar to one of the parties sanctioned by one or more of the E5.

This joint guidance builds on the Tri-Seal Compliance Note released by the U.S. Commerce, Treasury, and Justice Departments earlier this year.