On 15 March 2016, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the US Department of Commerce’s Bureau of Industry and Security (BIS) announced significant amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). The move follows earlier amendments implemented in the last year and further advances the policy goals announced by President Obama on 17 December 2014 concerning US-Cuba relations.
For decades, the US has maintained a comprehensive embargo on trade with Cuba. Since December 2014, the US authorities have taken actions to facilitate US engagement with Cuba, by authorizing a broad range of activities including travel, telecommunications, financial services, trade and shipping.
The recent amendments further authorize certain travel and related transactions, banking and financial services, trades and commerce and grants and awards with or involving Cuba or Cuban people. Under the amended CACR, US persons are now permitted to travel to Cuba for individual people-to-people educational travel without the involvement of an US organization. Additionally, these regulations expand Cuba and Cuban nationals’ access to US financial institutions by, among other things, allowing so-called "U-turn" payments through the US financial system, the processing of USD monetary instruments and the opening and maintaining of US bank accounts for Cuban nationals. The amended regulations also allow a number of trade and commerce transactions by US persons related to, among other areas, dealing in Cuba-origin goods in a third country, establishing and maintaining business and physical presence for certain authorized business transactions, provision of educational grants and awards, and importation of Cuban-origin software. The text of the new rule adopted by the OFAC is available here.
In the export controls areas administered by BIS, conforming changes are made to the EAR to generally authorize exports and re-exports of eligible items to establish and maintain a physical or business presence in Cuba that is authorized by OFAC. The amendments also generally authorize vessels to transport authorized cargo from the United States to Cuba and then sail to other countries with any remaining cargo that was onloaded in the United States. BIS will adopt a licensing policy of case-by-case review for exports and re-exports of items that would enable or facilitate exports from Cuba of items produced by the Cuban private sector. The text of the new rule adopted by the BIS is available here.
In addition, last month, the US Department of Transportation signed an arrangement with its Cuban counterparty that provides for the re-establishment of scheduled air service between the US and Cuba, and US air carriers are invited to apply for an allocation to provide such service.
Despite the significant changes that further ease sanctions on Cuba, the Cuba embargo remains in place and most transactions between, the US or persons subject to US jurisdiction (including foreign entities owned or controlled by a US entity), and, Cuba or Cuban nationals, continue to be prohibited. For potential trade with and investment in Cuba, specific US sanctions advice should be sought by those subject to US jurisdiction. The New York office of Herbert Smith Freehills has handled a wide range of matters related to the various US sanctions programs and stands ready to assist businesses seeking sanctions compliance advice.