On December 17 2014 President Obama announced that the United States and Cuba will seek to normalise their relations, including an easing of US sanctions against Cuba intended to further engage and empower the Cuban people (for further details please see "Relations with Cuba take new direction"). On January 15 2015 the US Department of Treasury Office of Foreign Assets Control (OFAC) and the US Department of Commerce Bureau of Industry and Security (BIS) announced publication of the amended Cuban Assets Control Regulations and Export Administration Regulations, respectively, which will implement these changes to the sanctions. The amendments took effect on January 16 2015 when the regulations were published in the Federal Register.
With these new amendments, OFAC and BIS have implemented policy changes and authorised a number of previously prohibited activities related to travel, financial services, telecommunications, trade and shipping. The amendments are examined below.
Travel to Cuba for authorised purposes
OFAC has authorised travel-related transactions and other transactions incident to activities within the 12 existing travel categories in its regulations:
- family visits;
- official government business;
- journalistic activities;
- professional research and meetings;
- educational activities;
- religious activities;
- public performances, clinics, workshops, athletic and other competitions and exhibits;
- support for the Cuban people;
- humanitarian projects;
- activities of private foundations or research or educational institutes;
- export, import or transmission of information or informational materials; and
- certain export transactions.
The amended regulations will not require travellers to secure case-by-case specific licences for these categories. The regulations include certain restrictions appropriate to each category of activities and continue to prohibit travel for tourist activities.
Persons subject to US jurisdiction, including travel agents and airlines, will be able to provide certain travel and air carrier services without needing to apply for a specific licence from OFAC.
OFAC has increased the limits on generally licensed remittances to Cuban nationals (other than certain prohibited Cuban government and Cuban Communist Party officials) from $500 to $2,000 per quarter. Certain remittances to Cuban nationals for humanitarian projects, support for the Cuban people and development of private business in Cuba are generally authorised without limitation. OFAC also raised the total amount of remittances that a traveller may carry to Cuba to $10,000. Banking institutions are permitted to process authorised remittances to Cuba without having to apply for a specific licence.
Credit and debit cards, per diem and import of certain goods and services
OFAC has authorised US financial institutions to enrol merchants and process credit and debit card transactions for travel-related and other transactions consistent with the regulations. These measures are expected to improve the speed and efficiency of authorised payments between the United States and Cuba. OFAC also eliminated the per diem limitation on authorised spending in Cuba and permitted authorised US travellers to Cuba to import up to $400 worth of goods acquired in Cuba for personal use. This amount cannot include more than $100 of alcohol or tobacco products.
Micro-financing, business and commercial import activities
OFAC has authorised certain micro-financing projects and entrepreneurial and business training, such as those for private business and agricultural operations. In addition, commercial imports of certain independent Cuban entrepreneur-produced goods and services are authorised.
OFAC has created a general licence to permit depository institutions to open and maintain correspondent accounts at Cuban financial institutions in order to facilitate the processing of authorised transactions, as well as to permit US financial institutions to reject and process certain funds transfer transactions.
Cash in advance
The regulatory interpretation of 'cash in advance' has been liberalised from 'cash before shipment' to 'cash before transfer of title and control', to allow expanded financing options for authorised exports to Cuba.
A new OFAC general licence facilitates the establishment of commercial telecommunications facilities linking third countries and Cuba and within Cuba. The commercial export of certain items that will further the ability of the Cuban people to communicate with people within Cuba, in the United States and with the rest of the world is allowed under a new BIS licence exception ("Support for the Cuban People"). This includes the commercial sale of certain consumer communication devices, related software, applications, hardware and services, as well as items for the establishment and update of communications-related systems. OFAC has also authorised persons subject to US jurisdiction to provide additional services incident to internet-based communications and related to certain exports and re-exports of communications items.
Consumer communications devices
BIS's existing "Consumer Communication Devices" licence exception has been amended to authorise the commercial sale of communication devices – including personal computers, mobiles, televisions, memory devices, recording devices and consumer software – to eligible persons and non-governmental organisations in Cuba. Previously, the licence exception authorised only donations of these items.
Transactions with Cuban nationals located outside Cuba
A new provision of the Cuban Assets Control Regulations authorises US-owned or controlled entities in third countries, including banks, to provide goods and services to Cuban nationals in third countries. Such transactions may not involve the commercial export of goods or services to or from Cuba. OFAC has also authorised the unblocking of accounts of Cuban nationals who have permanently relocated outside Cuba. OFAC will allow funds transfers through the United States for the personal expenditure of employees, grantees, contractors and persons who share a common dwelling as a family member of such employees, grantees and contractors, of third-country official missions in Cuba and of or any intergovernmental organisation of which the United States is a member or holds observer status in Cuba. Transactions related to third-country professional meetings and conferences attended by Cuban nationals will be authorised, and the provision of certain goods and services to Cuban national sailors sequestered aboard ships in US ports will be permitted.
Official government business and Cuban official missions
In an effort to support significant US government interests, OFAC has expanded an existing authorisation related to the conduct of official business to cover all Cuba-related transactions by employees, grantees and contractors of the US government, foreign governments and certain international organisations in their official capacities.
To facilitate the re-establishment of diplomatic relations with Cuba, OFAC authorised transactions with Cuban official missions and their employees in the United States.
OFAC authorised insurance companies to offer global insurance policies to cover third-country nationals travelling to Cuba. Health, life and travel insurance-related services will continue to be permitted for authorised US travellers to Cuba.
Under the amended regulations, foreign vessels are authorised to enter the United States after engaging in certain trade with Cuba.
Support for the Cuban People
The "Support for the Cuban People" licence exception also authorises exports and re-exports of certain items to provide support for the Cuban people in three areas:
- improving living conditions and supporting independent economic activity;
- strengthening civil society; and
- improving communications.
To improve living conditions and support independent economic activity, the exception authorises:
- building materials, equipment and tools for use by the private sector to construct or renovate privately owned buildings;
- tools and equipment for private agricultural activity; and
- tools, equipment, supplies and instruments for use by private sector entrepreneurs.
To strengthen civil society, the exception allows the export and re-export of donated items for use in scientific, cultural, educational, sporting and similar activities. Exports and re-exports to certain human rights organisations, individuals or non-governmental organisations are authorised. A traveller will be able to temporarily export items for use in professional research in the traveller's profession or full-time field of study, as long as the activities or research are not related to items on the US Munitions List or items controlled by the Commerce Control List. To improve communications, the "Support for the Cuban People" exception will allow exports and re-exports of items for use by news media personnel and US news bureaux. The exception will not authorise the export of items on the Commerce Control List for sensitive reasons (ie, national security, nuclear proliferation and regional stability).
The BIS "Gift Parcels and Humanitarian Donations" licence exception now authorises consolidated shipments of gift parcels in addition to individual gift parcels.
Liberalisation of licence application review policy
BIS has also set forth a general policy of approval for licence applications related to the export and re-export of items necessary for the environmental protection or enhancement of US and international air and water quality or coastlines.
Andrew Shoyer, Robert Torresen or Lana Muranovic
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