January 27, 2023

OFAC issues designations for individuals and entities linked to corruption in Paraguay and issues two new general licenses and FAQs

On January 26, 2023, the US Department of the Treasury’s Office of Foreign Assets Control sanctioned the former President of Paraguay Horacio Manuel Cartes Jara (“Cartes”) and Paraguay’s current Vice President Hugo Adalberto Velazquez Moreno (“Velazquez”) for engaging in corruption that undermines Paraguayan democratic institutions.  OFAC also designated four entities that are owned or controlled by Cartes, including Frigorifico Chajha SAE. The designations are imposed by OFAC pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets those involved in serious human rights abuses and corruption around the world.

To further implement the new sanctions, OFAC also issued two general licenses pursuant to the Global Magnitsky Sanctions Regulations, 31 CFR part 583 (“GMSR).  OFAC issued GL 5 to authorize, until March 27, 2023, all transactions that would otherwise be prohibited by the GMSR but are necessary to the divestment or transfer of debt or equity of Frigorifico Chajha SAE to non-US persons.  GL 5 specifies that the authorization only applies to transactions that facilitate, clear, and settle debt or equity trades of Frigorifico Chajha placed before January 26, 2023.  GL 5 also authorizes transactions necessary for the wind down of derivative contracts entered into before January 26, 2023 in which Frigorifico Chajha is a counter party or derivative contracts linked to the debt or equity of Frigorifico Chajha.  The transactions are only authorized if payments to blocked persons are made into blocked accounts in accordance with the GMSR.

OFAC issued GL 6 to authorize, until March 27, 2023, all wind down transactions with any of the newly-designated entities owned or controlled by Cartes (“designated Cartes entity”), including Frigorifico Chajha, or any entity in which Cartes or a designated Cartes entity owns a 50 percent or greater interest.  The transactions are authorized as long as payments to blocked persons are made into a blocked accounts in accordance with the GMSR.

OFAC also published new Frequently Asked Questions 1111 and 1112.  FAQ 1111 provides a general overview of GL 5 and clarifies that GL 5 does not authorize US persons to sell debt or equity of Frigorifico Chijah to blocked persons. FAQ 1111 also provides that non-US persons do not risk exposure to US sanctions if they engage in activities authorized for US persons in GL 5.  FAQ 1112 provides a general overview of GL 6 and clarifies that the general license only authorizes certain transactions related to blocked Cartes entities but does not authorize transactions involving Cartes himself.  FAQ 1112 also encourages US and non-US persons to seek guidance from OFAC if they are unable to wind down transactions with blocked Cartes entities before March 27, 2023.

Department of Treasury Press Release | General License 5 | General License 6 | FAQs 1111 and 1112