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Article: Venezuelan maritime authority to require port payments in sanctioned Petro currency
News & Insights 7 February 2020
The Petro is a cryptocurrency launched in early 2018 by Maduro’s government in Venezuela. It is ultimately backed by the country’s oil reserves and is thought to have been created, in part, as a means to circumvent existing US sanctions. This article provides more information on the Petro.
What is the Petro?
The Petro is a cryptocurrency launched in early 2018 by Maduro’s government in Venezuela. It is ultimately backed by the country’s oil reserves and is thought to have been created, in part, as a means to circumvent existing US sanctions.
Is the Petro sanctioned?
In March 2018, through Executive Order 13827, the US banned any 'United States person' or person 'within the United States' from dealing in any digital currency issued by the government of Venezuela, which includes the Petro.
The US Executive Order contains a further provision which prohibits any transaction 'that evades, or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate' of the primary sanction. This further wording is not specifically limited to persons and entities falling within US jurisdiction. It is therefore possible that the secondary provision might sanction a non-US entity which causes a US entity, such as a bank processing US Dollars, to deal in the Petro currency.
Has the Venezuelan government made the Petro mandatory for port payments?
By decree, the Maduro government has ordered that various 'decentralized' services and entities in Venezuela now charge for services in Petros (Decree 4096 dated 14 January 2020). This Decree extends to the Institute of Aquatic Spaces ('INEA'), which acts as the maritime authority in Venezuela. This means that services including 'pilotage, towage, launch service, re-floating services, custody and logistic launches provided to foreign flagged vessels' may have to be paid, at least in part, in Petros.
This is not the first time that payment for maritime services in Petros has been proposed in Venezuela, but this time, payment infrastructure for the Petro has been put in place which makes it more likely that the requirements in the latest Decree will be enforced. In particular, the club understands that local shipping agents must now register for the 'PetroApp' and that, in due course, INEA intends to receive payments through this system in Petro currency.
Trade to Venezuela should be considered carefully in light of the above developments. Given the direct conflict between local Venezuelan requirements and US sanctions, members who are unsure of their position are strongly recommended to take legal advice. We further recommend contacting your usual club contact, who can provide up-to-date information from local sources and provide recommendations with respect to experienced sanctions lawyers, as required.