The U.S. Department of the Treasury (“Treasury”) Office of Foreign Assets Control (“OFAC”) has designated the Nicaraguan mining authority General Directorate of Mines (“DGM”), as well as Reinaldo Gregorio Lenin Cerna Juarez, an official of the Government of Nicaragua, pursuant to Executive Order (“E.O.”) 13851. DGM is being designated for being owned or controlled by or having acted or purported to act for or on behalf of, directly or indirectly, Salvador Mansell Castrillo, who is the Nicaraguan Minister of Energy and Mines and whose property and interests in property were blocked pursuant to E.O. 13851. OFAC also issued Nicaragua General License (“GL”) 4, which provides a time-limited authorization allowing U.S. persons to wind down transactions involving DGM. OFAC also issued associated guidance noting that foreign persons generally do not risk sanctions for engaging in activities that would be authorized by GL 4.

In addition, the White House signed a new E.O. that amends E.O. 13851 and expands the Treasury’s authority to hold the Ortega-Murillo regime accountable for its continued attacks on Nicaraguans’ freedom of expression and assembly. Furthermore, the new E.O. gives the Treasury the authority to target certain persons that operate or have operated in the gold sector of the Nicaraguan economy, and any other sector identified by the Secretary of the Treasury in consultation with the Secretary of State. The new E.O. also provides expanded sanctions authorities that could be used to prohibit new U.S. investment in certain identified sectors in Nicaragua, the importation of certain products of Nicaraguan origin into the United States, or the exportation, from the United States, or by a United States person, wherever located, of certain items to Nicaragua.

As a result of the recently issued sanctions, all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, any entities that are owned, directly or indirectly, 50 percent or more in the aggregate by one or more of such persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons are prohibited, unless authorized by a general or specific license issued by OFAC, or otherwise exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to E.O. 13851 and the receipt of any contribution or provision of funds, goods, or services from any such person.

***

We will continue to monitor developments in this area and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or your usual Herbert Smith Freehills contacts for more information.

Jonathan Cross
Jonathan Cross
Partner, New York
+1 917 542 7824
Christopher Boyd
Christopher Boyd
Associate, New York
+1 917 542 7821
Brittany Crosby-Banyai
Brittany Crosby-Banyai
Associate, New York
+1 917 542 7837
Kelechi Okengwu
Kelechi Okengwu
Associate, New York
+1 917 542 7636