U.S. sanctions create risks and challenges for Paraguay's business community
March 17, 2023
Kuang Chiang, Nick Ognibene, Maura Rezendes, Ken Rivlin
Allen & Overy LLP
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U.S. sanctions overview
OFAC designated Cartes, Velázquez, and the Designated Cartes Companies as SDNs pursuant to Executive Order 13818 (EO 13818) under the Global Magnitsky Human Rights Accountability Act. In addition, any entities owned 50% or more, directly or indirectly, by one or more SDNs are subject to the same sanctions. OFAC targeted Cartes and Velázquez because OFAC determined them to be involved in “rampant corruption that undermines democratic institutions in Paraguay”, and targeted the Designated Cartes Companies for being owned or controlled by Cartes.
As a result, the Paraguayan SDNs are subject to far-reaching property restrictions. The property and interests in property of all Paraguayan SDNs in the United States or within the possession or control of U.S. persons are blocked (e., frozen), and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. U.S. persons1 are prohibited from making or receiving any contribution or provision of funds, goods or services to, or for the benefit of, any person targeted under EO 13818. As such U.S. persons are generally prohibited from engaging in any dealings with or for the benefit of any Paraguayan SDNs in any manner.
EO 13818 also prohibits any transaction that causes a violation of any of EO 13818’s other prohibitions. As a result, a non-U.S. .person may violate U.S. sanctions by engaging in any dealings with or for the benefit of any Paraguayan SDN which involve a U.S. nexus. This could potentially include any transactions which involve any U.S. persons (including U.S. person employees of non-U.S. companies), the U.S. financial system (including any U.S. correspondent banks), or U.S. dollars.
Finally, EO 13818 authorizes additional sanctions against any persons deemed to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person sanctioned under EO 13818. As a result, any non-U.S. person that engages in any dealings with or for the benefit of any Paraguayan SDN risks becoming sanctioned in the same manner.
More:
https://www.jdsupra.com/legalnews/u-s-sanctions-create-risks-and-5100933/