Further to certain policy changes announced by the President on December 17, 2014, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) has published amendments to the Cuban Assets Control Regulations (CACR), 31 C.F.R. Part 515. OFAC also released new FAQs on the CACR. Coordinated with these changes, the Department of Commerce, Bureau of Industry and Security (BIS) has published changes to the Export Administration Regulations (EAR), 15 C.F.R. Parts 730 -774. The modifications are effective immediately.
The changes are intended to facilitate travel to Cuba for authorized purposes, authorize related services by travel agents and airlines, and facilitate certain financial transactions largely related to such travel and other authorized activities. In addition, the modifications to the regulations will allow a number of other activities principally related to telecommunications, insurance and financial services, trade, and shipping.
The amendments to the EAR create a new License Exception, “Support for the Cuban People” (SCP) at 15 C.F.R. § 740.21. This new License Exception authorizes the export and reexport of identified items to Cuba that are intended to:
- Improve the living conditions of the Cuban people;
- Support independent economic activity and strengthen civil society in Cuba; and
- Improve the free flow of information to, from, and among the Cuban people (focusing largely on telecommunications and internet hardware and services).
Specific items authorized under the new General License SCP include:
- Building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, including privately-owned residences, businesses, places of worship and buildings for private sector social or recreational use;
- Tools and equipment for private sector agricultural activity; and
- Tools, equipment, supplies, and instruments for use by private sector entrepreneurs. Examples of private sector entrepreneurs identified by BIS include auto mechanics, barbers and hairstylists and restaurateurs.
The changes to the EAR also amend License Exceptions “Consumer Communications Devices” (CCD) authorizing sales of identified communications items to eligible end users in Cuba and License Exception “Gift Parcels and Humanitarian Donations” (GFT), authorizing exports of multiple gift parcels in a single shipment. In addition to these new or amended License Exceptions, the published changes to the EAR amend the licensing policy for Cuba by implementing a policy of approval for exports and reexports of items necessary for the environmental protection of U.S. and international air quality, waters, and coastlines (including items related to renewable energy or energy efficiency).
The amendments to the CACR are largely related to expanding and simplifying authorized travel. These changes include creating General Licenses for types of travel previously authorized under specific licenses, such as travel for educational activities (including people-to-people travel), journalistic and religious activities, professional meetings, and humanitarian projects under General Licenses, as well as the possibility of specific licenses for additional travel activities. However, the CACR will continue to prohibit tourist travel for U.S. persons, as prohibited by statute.
In addition to this loosening of U.S. travel restrictions, the modifications authorize persons subject to U.S. jurisdiction, such as travel agents and airlines, to provide authorized travel and carrier services. They also ease restrictions on related financial transactions, such as increasing and simplifying authorized remittances, the use of U.S. credit and debit cards during authorized travel, and eliminating the per diem limitation on authorized travelers’ spending in Cuba. They also authorize persons subject to U.S. jurisdiction to issue and support insurance policies covering travel to and within Cuba if such travel is either authorized or not otherwise subject to U.S. jurisdiction (e.g., vacation travel to Cuba by non-U.S. persons).
Other changes applicable to the financial sector include a general license authorizing depository institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions and to permit U.S. financial institutions to reject and process funds transfer transactions.
The telecommunications sector is impacted by changes both to the CACR and the EAR. Changes to the CACR authorize transactions that establish mechanisms to provide commercial telecommunications services linking third countries and Cuba, as well as within Cuba. They also authorize services incidental to internet-based communications and related to exports and reexports of communications items.
Because all sanctions programs are highly detailed and fact specific, and because these changes in particular are complicated (and will likely be monitored closely), it is critical to review potential Cuba-related activities carefully before proceeding.