The US-Venezuela Crisis and How It Affects Compliance?
The ongoing crisis between the US and Venezuela has been a long time coming, with sanctions, a naval blockade on Venezuelan oil shipments, U.S. military and law enforcement actions against Maduro being proof of this conflict. The long-running dispute of these countries have turned into confrontations in 2026.
The U.S. is tightening financial and trade restrictions on Venezuela in general, and these updates affect financial companies greatly. It’s important for firms and regulators to know current sanctions, updates from either of these countries and their relationship.
In this blog post, we’ll be detailing how this crisis started and escalated, and how it will affect the financial industry and compliance as a whole.
What Is the US–Venezuela Crisis and Why Does It Matter Globally?
The crisis between the US and Venezuela has been going on for a couple months but the level of tension escalated when Nicolas Maduro was imprisoned with his wife by the Trump administration.
Politically, the situation started with diplomatic pressure and sanction by the US and shifted to direct confrontation with Caracas accusing Washington of unlawful aggression.
Economically and financially, sanctions and trade restrictions have created problems for Venezuela’s oil exports, which is the country’s primary source of revenue. Because of these problems, the country pivoted towards countries like China and Russia for trade and financial support.
Disruption to Venezuelan oil can affect global energy markets, refinery supply chains and investor confidence globally. The complex legal and compliance challenges financial institutions face because of US sanctions show how important the crisis is for companies.
The History of US–Venezuela Relations
For much of the 20th century, Venezuela and the U.S. had strong ties because of oil trade. American companies played a major role during this time in developing Venezuela’s petroleum industry. The U.S. became one of Venezuela’s larget markets regarding the oil industry.
This changed in the late 1990s and early 2000s when Hugo Chavez came to power. His anti-US views led to him nationalising the oil sector and aligning the country with Russia, China and Iran. With these actions, the relationship between the countries have become to deteriorate.
Over time, with Venezuela’s growing dependence on oil revenue and domestic politics becoming more polarising, the US resorted to sanctions and financial restrictions in the 2010s. These decisions were made as production faltered and economic mismanagement increased in the country, and most of these sanctions and restrictions were targeted Venezuela’s state oil company, PDVSA.
Nicolás Maduro’s Leadership
Nicolás Maduro’s presidency is filled with contested elections, accusations of fraud and repression of the political opposition. The most controversial elections have been the presidential elections in 2024 and 2025. The lack of transparency led to many governments refusing to recognise the official results.
These concerns led to real consequences for how Venezuela is seen by the global financial system. Important international institutions like the International Monetary Fund have said that they won’t engage in financial transactions with Venezuela until it is clear who governs the country, which blocks access to foreign reserves and creditor support.
At the same time, the US and other Western governments have imposed economic sanctions against Maduro’s inner circle and government officials. Therefore, Maduro’s controversial win led to Venezuela’s ability to secure investment or debt financing being limited.
Nicolás Maduro has been captured by the U.S. government along with his wife Cilia Flores on 3 January 2026, with an operation codenamed Operation Absolute Resolve. The Venezuelan government has remained in place with vice president Rodríguez sworn in as acting president on 5 January 2026.
US Sanctions Imposed on Venezuela
The sanctions the US implemented against Venezuela for the past decade have mostly been through the Office of Foreign Assets Control (OFAC). The sector most affected by sanctions is the oil sector.
- Early sanctions have begun in the mid-2000s when OFAC first designated Venezuelan individuals for alleged support of terrorist activities.
- On March 2015, president Obama blocked property and suspended entry of certain officials of the Venezuelan government, including President Maduro, and other senior government and military officials.
- More forceful sanctions were introduced in 2017 and 2018 when the Trump administration began restricting Venezuela’s access to U.S. financial markets.
- In 2019, under Executive Order 13850, OFAC designated Petróleos de Venezuela, S.A. (PdVSA) as subject to sanctions, froze its U.S.-based assets, and barred U.S. persons from dealing with it.
- In late 2019, the U.S. continued with freezing assets of the Maduro government and authorised visa restrictions.
What Is Happening to Venezuela’s Banking and Financial System?
Venezuelan banks’ direct ties to the global financial system have been mostly reduced. International sanctions, especially designations by OFAC of state-owned banks and entities as Specially Designated Nationals (SDNs), have prohibited U.S. financial institutions and many non-U.S. banks from keeping normal correspondent banking relationships with Venezuelan institutions.
As a resuly, nearly all major international banks have terminated these relationships. Venezuelan banks now mostly rely on small intermediaries, third-country arrangements or opaque workarounds to conduct cross-border transactions.
How Is Venezuela Linked to Illicit Financial Activity?
In recent years, Venezuela has become an important transit hub for drug trafficking and associated financial crimes. Similarly, corruption in in Venezuela has been present at all levels of government and contributed a lot to illicit financial activity.
Government officials and people connected to them have been accused of looting state resources and diverting revenues from Venezuela’s oil and other industries for personal gain. These people use schemes to move funds through foreign accounts, real estate, and corporate structures.
Groups like Tren de Aragua, a Venezuelan gang designated by the U.S. Treasury as a transnational criminal organization for activities including drug and human trafficking and money laundering, show how organized crime operates both within Venezuela and across borders by exploiting weak law enforcement and financial controls.
Also, high-profile criminal charges against Venezuelan officials being involved in faciliating drug trafficking operations and protecting smuggling networks have shown the levels of organized crime and state corruption in the country.
Cryptocurrency in Venezuela
Digital assets are being used as an alternative given how many sanctions are placed against Venezuela and the economic crisis the country currently is in. Cryptocurrency has been embraced by both everyday citizens and businesses.
In practive, Venezuelans are using crypto to preserve purchasing power. Even salary payments and retail transactions are sometimes done using crypto since reliable banking alternatives are limited.
The use of crypto improves financial access for Venezuelan people, but it also presents important AML/CFT challenges since regulations are limited. Many crypto transactions happen through peer-to-peer (PSP) markets, informal brokers and wallets with weak KYC controls. Movement of funds and linking of identities is made more difficult because of this.
Why Is Venezuela Classified as a High-Risk Jurisdiction for AML?
Venezuela is seen as a high-risk jurisdiction for anti-money laundering (AML) and counter-terrorist financing (CFT) by regulators and compliance professionals. This is because of structural weaknesses in the country’s financial and regulatory systems, political and economic instability and persistent corruption.
Venezula has been placed on the Financial Action Task Force’s (FATF) grey list because of these deficiencies in AML/CFT regulations, showing that enhanced due diligence is needed for transactions involving Venezuelan parties.
Some factors that increase AML risks in Venezuela:
- Weak enforcement and regulatory capacity
- Corruption and political exposure
- Informal economy and cash usage
- High-risk PEP (Politically exposed persons) exposure
Because of these vulnerabilities, Venezuela consistenly ranks high on the Basel AML Index, which combines multiple indicators like corruption, financial transparency and rule of law to measure money-laundering risk.
What Does the US–Venezuela Crisis Mean for AML Compliance Programs?
The evolving US-Venezuela crisis has heightened AML and sanctions risk for financial institutions and other regulated entities. Compliance programs should be relying on a risk-based approach to assess exposure to Venezuelan-related activity. Enhanced due diligence being integrated when needed and ongoing monitoring being maintained is important to detect threats as well.
Successful AML compliance programs should also follow updates regarding sanctions and PEP lists. Regular risk assessments can be made if these lists are followed in an appropriate manner. Venezuela’s own regulatory changes should also be followed to see the country’s approach towards compliance.
How Should KYC and KYB Processes Adapt to High-Risk Jurisdictions?
In high-risk jurisdictions like Venezuela, standard KYC and KYB processes are not enough for compliance. Companies should be applying enhances and risk-based due diligence for these countries. Continuous due diligence is recommended to keep away from compliance risks.
For continuous due diligence companies can:
- Regularly rescreen customers and beneficial owners (UBOs) against updates sanctions, PEP, and watchlists
- Implement ongoing adverse media monitoring to detect emerging investigations and allegations
- Periodically refresh customer information, including ownership, control and source-of-funds data
- Review transactions regularly to detect unusual activity
How Can Sanction Scanner Help?
Sanction Scanner helps companies be compliant by managing Venezuela-related AML and sanctions risks with centralised and real-time compliance intelligence. The software enables sanctions, PEP, and adverse media checks across global watchlists, helping companies detect Venezuelan individuals and act accordingly.
Moreover, Sanction Scanner uses transaction monitoring to detect suspicious patterns and sanctions-evasion behaviours which are common in high-risk jurisdictions. The software also strengthens KYC and KYB processes by supporting enhanced due diligence with continuous screening, ownership and control checks, and ongoing adverse media monitoring.
