Venezuela Business Risks and Regulations

The Trump Administration’s removal of former Venezuelan president Nicolás Maduro and recent announcements regarding the development of natural resources in Venezuela portend the United States’ renewed focus on the Western Hemisphere.

Although the shift in policy presents an opportunity for U.S. companies, U.S. restrictions and sanctions with respect to Venezuela have not eased. Companies engaging in activities linked to Venezuela continue to face layered regulatory risks, including:

1. Civil and criminal exposure under the Anti‑Terrorism Act (ATA) (18 U.S.C. § 2333) for lending direct or indirect “material support” to drug cartels and other actors that have been designated as Foreign Terrorist Organizations (FTOs);
2. Treasury’s Office of Foreign Assets Control (OFAC) risk and potential criminal exposure under the International Emergency Economic Powers Act (IEEPA) for dealing with sanctioned, designated, or “blocked” parties, including the Government of Venezuela, PdVSA, and other Specially Designated Global Terrorists (SDGTs);
3. Bank Secrecy Act (BSA)/Anti Money Laundering (AML) programs, due‑diligence, and Suspicious Activity Report (SAR) obligations in an opaque banking sector; and
4. Foreign Corrupt Practices Act (FCPA), anti‑bribery and books‑and‑records risk in an environment where public corruption has long been endemic.

In evaluating potential business opportunities, companies should assess their compliance programs and diligence policies and consider steps to improve internal practices relevant to doing business in such a complex and high-risk environment. Improving these processes now will better position businesses to avoid altogether or defend against government investigations and civil litigation as they take advantage of business opportunities in Venezuela.

Current Regulatory Challenges

• The U.S. government has maintained its use of terrorism, corruption, and sanctions tools against Venezuelan actors and networks such that any foreign direct investment or activity in Venezuela runs a high risk of interactions with restricted parties. Such U.S. legal restrictions are based on different designations stemming from a variety of regulations. Some of these designations of restricted parties include Foreign Terrorist Organization (FTO) designations made by the U.S. Secretary of State under 8 U.S.C. § 1189. Engaging with a designated entity exposes companies to the risk under the criminal “material support” statute (18 U.S.C. § 2339B) and can create ATA civil exposure. The criminal statute has international reach and broadly prohibits providing “material support” to designated entities. The law defines “material support” broadly, increasing the chance of potential exposure where a corporation may lend such support to an FTO, even without the knowledge of leadership in the U.S.
• ATA aiding‑and‑abetting: Under the standard articulated by the Supreme Court in Twitter v. Taamneh, civil liability may attach where a defendant knowingly provides substantial assistance to a person who committed an act of international terrorism and the defendant is generally aware of the person’s role in the tortious conduct. The Court held that there did not need to be a strict nexus between the assistance provided and the wrongful act by the terrorist and that the aider and abettor need not know all the details of the terrorist activity. A recent decision from the district court in New York shows that plaintiffs may survive motions to dismiss by alleging a defendant’s general awareness that services provided by a financial institution had a role in unlawful conduct from which terrorist acts were foreseeable—especially when the defendant’s AML/OFAC controls were deficient. Financial institutions, money-services businesses (MSBs), and emerging payments firms face acute risk of treble-damages suits under the ATA.
• Specially Designated Global Terrorist (SDGT): A designation under EO 13224 administered by OFAC triggers asset‑blocking and sanctions prohibitions, which carry significant administrative and criminal penalties for a U.S. person’s transactions with designated entities.
• “Blocked” status: Venezuelan persons and entities that are not designated as either an FTO or SDGT still may be blocked by various Executive actions, including EO 13884 (Government of Venezuela) and EO 13850 (sectoral/corruption). U.S. persons are broadly prohibited from dealing with blocked entities absent authorization; civil penalties may be imposed on a strict‑liability basis under IEEPA. Importantly, under OFAC’s 50 Percent Rule, any entity owned 50 percent or more, directly or indirectly, individually or in aggregate by one or more blocked persons is itself blocked—even if not listed. Aggregation of ownership interests applies.
• Licensing: OFAC general licenses authorize categories of activity, such as General License 2, which authorizes all otherwise prohibited transactions if the only Government of Venezuela entity involved is CITGO Holdings, Inc.; specific licenses apply to particular transactions. Licenses may be time‑limited and conditioned.
• FCPA’s anti-bribery provisions, 15 U.S.C. §§ 78dd-1, 78dd-2, 78dd-3, and accounting provisions, 15 U.S.C. § 78m(b)): U.S. government reporting describes a general environment in Venezuela in which corrupt officials profit from drug trafficking and the exploitation of commodities. The FTO-designated Cartel de los Soles embeds within the Venezuelan military and government apparatus heightening the risk that payments to obtain licenses, customs clearances, security, or local access will be routed to corrupt officials, their proxies, or sanctioned intermediaries. FCPA investigations connected to drug cartels are one of DOJ’s focus areas under its June 2025 FCPA Guidance.¹Guidelines for Investigations and Enforcement of the Foreign Corrupt Practice Act (FCPA).

Even following the actions to remove Maduro in early 2026, OFAC continues to “block” certain dealings with the Government of Venezuela. Treasury and the Department of State also have expanded designations against the Government of Venezuela (under EO 13224 (SDGT), EO 13850 (sectoral/corruption) and EO 13884 (Government of Venezuela)), requiring periodic licensing adjustments affecting energy and mining transactions.

DOJ has emphasized terrorism‑related prosecutions and reinforced corporate compliance expectations, while FinCEN has highlighted as national AML priorities corruption, transnational criminal organizations, and terrorist financing.

In February 2025, the Department of State designated Tren de Aragua (TdA) as an FTO (8 U.S.C. § 1189) and Treasury designated the group as a SDGT (Executive Order 13224), citing Tren de Aragua’s transnational violence, kidnappings, extortion, bribery of officials, and assassinations across South America. This designation broadly prohibits U.S. persons from providing material support to TdA (18 U.S.C. § 2339B) and triggers collateral enforcement tools that reach financial and commercial facilitation.

In November 2025, the Department of State also designated the Cartel de los Soles—a Venezuela-based organization led by Maduro and senior regime figures—as an FTO; and Treasury previously designated it under Executive Order 13224 for materially supporting FTOs including TdA and Mexico’s Sinaloa Cartel. These designations by the Department of State block property, bar transactions by U.S. persons, and expose violators to severe civil and criminal penalties.

According to the State Department and Treasury, Cartel de los Soles includes networks of current and former Venezuelan military officers and government officials, leveraging state platforms for protection and logistics. The Department of Justice unsealed its December 2025 superseding indictment charging Maduro in January 2026. In it, DOJ alleges that: “[p]owerful Venezuelan elites enrich themselves through drug trafficking and the protection of their partner drug traffickers. The profits of that illegal activity flow to corrupt rank-and-file civilian, military, and intelligence officials, who operate in a patronage system run by those at the top-referred to as the Cartel de Los Soles or Cartel of the Suns, a reference to the sun insignia affixed to the uniforms of high-ranking Venezuelan military officials.”²https://www.justice.gov/opa/media/1422326/dl. Investigative reporting further describes operational ties between Cartel de los Soles and other sanctioned terrorist organizations, including U.S.-designated FARC factions, which ties compound material-support, sanctions-evasion, and due-diligence risks.³https://insightcrime.org/venezuela-organized-crime-news/cartel-de-los-soles-profile/.

The Venezuelan government denies that Cartel de los Soles exists. Public reporting indicates that the Cartel de los Soles lacks a formal structure, with some experts describing it more as a “a system of widespread corruption” than an organization.⁴https://www.bbc.com/news/articles/cy8j4ye5x0mo. The Department of Justice’s December 2025 Maduro indictment was filed after the FTO designation of Cartel de los Soles, but in the indictment the group is not referenced as an FTO—indicating that prosecutors chose not to take on the burden of proving the elements of an FTO-related offense at trial. The nature of the Cartel de los Soles raises significant questions about which Venezuelan military, government, and businesses are affiliated with the FTO.

Sector-Specific Considerations

Practical Risk‑Management Takeaways

As businesses analyze the evolving facts on the ground in Venezuela, developing U.S. policy priorities, and potential business opportunities, there are some risk-management steps businesses should consider to better position themselves to take advantage of potential investments in or connected to Venezuela:

• Improve training: update existing FCPA and anti-bribery training to capture the impact of the FTO designations. Consider additional training and signed acknowledgements of FTO and FCPA obligations by on-the-ground management or intermediaries working in Venezuela.
• Gating controls: suspend activity where (i) direct value transfers to FTO/SDGT/blocked parties cannot be precluded; (ii) OFAC licensing is required but obtaining a license is uncertain; (iii) ownership/control determinations of opposite parties cannot be resolved; or (iv) repeated unresolved red flags persist in port/security/logistics layers.
• Payment architecture: financial entities should require enriched messages with full originator/beneficiary data and purpose; implement allow lists for vetted government‑adjacent transactions; block/reject where destination risk cannot be ruled out.
• Documentation: maintain contemporaneous records of risk assessments, license dependence, screening and resolution steps, and board/management reporting.
• Privileged assessments: consider assessing current policies and procedures under the attorney-client privilege, identifying any areas or specific incidents that may require a deeper privileged investigation.

King & Spalding will continue to closely watch the legal and political developments impacting U.S. and international business interests in Latin America as the Administration moves to implement its strategy focused on the Western Hemisphere.