Effective March 16, 2016, the U.S. Department of Commerce Bureau of Industry and Security and the U.S. Department of Treasury Office of Foreign Assets Control issued new regulations further amending the current sanctions on Cuba.
The amendments include a license exception for temporary sojourn of vessels containing cargo for other destinations, authorization to export certain items subject to the Export Administration Regulations to persons authorized to have a physical or business presence in Cuba, adopting a case-by-case review policy for exports that would facilitate export of items produced by the Cuban private sector, further facilitating travel to Cuba for authorized purposes, expanding authorized financial transactions and authorizing additional business and physical presence in Cuba.
The amendments were made to further the policy announced by President Obama on December 17, 2014 to engage and empower the Cuban people. Despite these amendments, companies are still broadly prohibited from engaging in transactions involving Cuba. Significantly, the requirement for a license or a license exception for all items subject to the EAR remains in place and the general restrictions on transactions with Cuba remain in place.
BIS is amending the License Exception Aircraft, Vessels and Spacecraft in 15 CFR § 740.15 to authorize transit through Cuban territory of cargo that is destined for other countries. The cargo must be laden on a vessel and the cargo must depart with the vessel. Additional restrictions apply, including that the vessel may not remain in Cuba for more than 14 consecutive days before departure.
BIS is also revising License Exception SCP (Support for the Cuban People) to authorize export or reexport of EAR99 items and items controlled only for anti-terrorism reasons for use by persons authorized by OFAC to establish and maintain a physical or business presence in Cuba.
Additionally, BIS is adopting a case-by-case review policy for license applications of items that will enable or facilitate exports from Cuba of items produced by Cuba’s private sector. BIS will continue to generally deny applications for exports and reexports of items for use by state-owned or operated agencies and organizations that primarily produce revenue for the state.
In connection with the BIS amendments, OFAC is amending the Cuban Assets Control Regulations to:
- Remove the requirement that people-to-people educational travel must be conducted through an organization that sponsors such exchanges. Individuals must maintain records to show they complied with other requirements, including that they had a full-time schedule of authorized activities;
- Remove the limitation on receipt of compensation exceeding living expenses and personal consumption by a Cuban national present in the U.S. in a non-immigrant status or other non-immigrant travel authorization;
- Authorize persons subject to U.S. jurisdiction to purchase and consume Cuban-origin goods while in a third country or to obtain services from Cuba or a Cuban national that are ordinarily incident to travel in the third country; however, importation of the goods is not authorized;
- Authorize U-turn transactions where Cuba or a Cuban national has an interest through the U.S. financial system. Transfers from a bank outside the U.S. that pass through one or more U.S. financial institutions before being transferred to a bank outside the U.S. where neither the originator nor the beneficiary is a U.S. person are authorized;
- Authorize U.S. banking institutions to process U.S. dollar monetary instruments presented indirectly by Cuban financial institutions;
- Authorize banking institutions to open accounts in the name of a Cuban national present in the U.S. for receiving payments in the U.S. related to authorized transactions;
- Authorize additional persons subject to U.S. jurisdiction to establish and maintain a business presence in Cuba, including through subsidiaries, branches, offices, joint ventures, franchises and agency or other business relationships with any Cuban individual or entity for exporters of goods authorized for export or re-export to Cuba and entities providing mail or cargo services related to authorized transactions;
- Authorize additional persons subject to U.S. jurisdiction to establish a physical presence in Cuba, including entities engaging in noncommercial activities authorized by 15 CFR § 515.574, entities engaging in certain humanitarian projects, and private foundations, research or educational institutes engaging in certain authorized transactions;
- Authorize provision of certain educational grants, scholarships or awards to a Cuban national; and
- Authorize importation of Cuban-origin software.
Despite the relaxing of the sanctions, broad restrictions remain on exporting items, traveling to, or transacting business in Cuba. Licenses or authorizations are still required for export of all items subject to the EAR, and tourist travel is still prohibited. Additionally, unless specifically authorized under a general license, transactions and services with Cuba are still prohibited. Additional information regarding the BIS amendments can be found here and information regarding the OFAC amendments can be found here.