BY
SONIA OSORIO
The Trump administration imposed sanctions on Jan. 28, 2019, on the state-owned oil company of Venezuela, a potentially critical economic move aimed at increasing pressure on President Nicolas Maduro to cede power to the opposition.
U.S. sanctions on the Nicolás Maduro regime in Venezuela are affecting the financial system of Florida by forcing banks to spend much more time revising banking transactions with Venezuela to avoid hefty penalties.
The president and CEO of the Florida International Bankers Association (FIBA), David Schwartz, told el Nuevo Herald on Thursday that banks now must carefully review all operations related to Venezuela, which is becoming a major burden for financial entities.
“[The sanctions] have affected [banks] a lot, in terms of analyzing the operations, because there is a multitude of transactions being made between banks in Miami and Venezuela, either business to business transactions or citizens who still have family there and send them money,” he said.
The issue of transactions with Venezuela will be one of the main topics of the 19th FIBA Anti-Money Laundering Compliance Conference to be held from March 11-13 in Miami. More than 1,200 bankers from the U.S., Latin America, Europe and Asia are expected to attend.
The Office of Foreign Assets Control of the U.S. Treasury Department (OFAC) has imposed sanctions on several officials of the Maduro regime and some business people, who face accusations of money laundering, drug trafficking, corruption or human rights violations.
The punishment has also been applied to companies, including state-owned oil company Petróleos de Venezuela, S.A. (PDVSA), whose assets were frozen, including payments received by the Maduro regime for Venezuelan crude oil transactions sold to U.S. refineries.
According to U.S. authorities, the sanctions would block access to about $7 billion in PDVSA assets and about $11 billion in sales.
Violating these sanctions, even involuntarily, would result in severe penalties to any bank.
“There is fear of not complying and it is not that they are going to do it on purpose, it can happen by chance, there are so many transactions being made that it is possible to fail,” the banker said.
A bank can receive a fine of up to $1 million for each transaction that is considered a criminal offense and a fine of double the amount of the operation up to a little more than a million if it is classified as a civil offense, he said.
Schwartz said that the sanctions are so complex that financial institutions must analyze each banking transaction thoroughly. The monitoring system warns with red alerts when it comes to an operation with Venezuela.
U.S. banks have departments of compliance with the USA PATRIOT Act, implemented after the terrorist attacks of Sept. 11, 2001, to combat money laundering and the financing of terrorism. This legal framework contains regulations that directly or indirectly affect all the countries of the world and their financial sectors.
“With the Patriot Act, the compliance departments continue to grow in terms of the number of people and now with Venezuela [sanctions] that implies that maybe we have to divert some officials from those units to deal with the Venezuela transactions,” Schwartz said.
Regarding the importance of the FIBA Anti-Money Laundering Compliance Conference in March, Schwartz added that there is “a very important Venezuelan population in Miami that must understand exactly what is happening with their country, especially in the matter of doing business, because the U.S. has issued sanctions on Venezuela, the government, PDVSA.”
In the conference, a panel of experts, including lawyer Eugenio Hernández Bretón, of Baker & McKenzie, who is in Venezuela and works with Venezuelan clients, will analyze how to mitigate the risks of doing business with that country.
Another topic that will be discussed at the conference is the possibility that banks incorporate more technology, such as the use of artificial intelligence, in compliance management. There also will be discussions on money laundering in real estate and on how to combat human trafficking with financial information.