In implementation of the policy changes announced by President Barack Obama on December 17, 2014, the US Department of the Treasury, Office of Foreign Assets Control (OFAC) has amended the Cuban Assets Control Regulations, 31 CFR Part 515 (CACR) to reduce the restrictions on a wide range of activities involving Cuba.
The regulatory amendments, as more generally described in our December 22, 2014 International Trade Alert, are effective January 16, 2015 and include the following:
- Travel to Cuba for authorized purposes. OFAC expanded the authorized travel-related transactions and other transactions incident to activities within the 12 existing travel categories in the CACR – such as for educational activities (including people-to-people travel), journalistic and religious activities, professional meetings and humanitarian projects – without the need for case-by-case specific licensing, while continuing not to authorize travel for tourist activities, which is prohibited by statute. The authorizations contain certain restrictions appropriate to each category of activities.
- Travel services. OFAC amended the CACR to permit persons subject to US jurisdiction, including travel agents and airlines, to provide authorized travel and carrier services, and certain entities to forward authorized remittances, under conditions set forth below, without the need for specific licenses from OFAC.
- Remittances. OFAC amended the CACR to raise from $500 to $2,000 per quarter the limits on remittances that may be sent to Cuban nationals, and to generally authorize, as is done now, as appropriate, on a case-by-case basis, without limitation, remittances for humanitarian projects, support for the Cuban people, and development of private business in Cuba. Further, a traveler may now carry up to $10,000 in remittances to Cuba.
- Credit and debit cards, per diem, and importation of certain goods and services. OFAC amended the CACR to authorize persons subject to the jurisdiction of the US to use US credit and debit cards in Cuba for travel-related and other transactions consistent with authorized travel and to allow US financial institutions to enroll merchants and to process such transactions. OFAC also eliminated the per diem limitation on authorized travelers’ spending in Cuba and now permits authorized travelers to import no more than $400 worth of goods from Cuba (including up to $100 in alcohol or tobacco products).
- Certain micro-financing, business and commercial import activities. OFAC amended the CACR to authorize certain micro-financing activities and entrepreneurial and business training, such as for private businesses and agricultural operations. OFAC also added new section to the CACR to authorize commercial imports of certain specified goods and services produced by independent Cuban entrepreneurs.
- Certain financial transactions. OFAC added a new general license to authorize depository institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions and to permit US financial institutions to reject and process certain funds transfer transactions.
- Regulatory interpretation of “cash in advance.” OFAC amended the CACR to revise the regulatory interpretation of “cash in advance” from “cash before shipment” to “cash before transfer of title and control” to allow expanded financing options for authorized exports to Cuba, such as agricultural commodities, medicine and medical devices.
- Telecommunications. In order to better provide efficient and adequate telecommunications services between the United States and Cuba, OFAC amended the CACR generally authorize transactions that establish mechanisms to provide commercial telecommunications services linking third countries and Cuba and in Cuba. Persons subject to US jurisdiction are also authorized to provide additional services incident to internet-based communications and related to certain exportations and reexportations of communications items.
- Certain transactions with Cuban nationals located outside of Cuba. OFAC added new authority for US-owned or -controlled entities in third countries to provide, with some limitations, goods and services to Cuban nationals in third countries. OFAC also unblocked accounts of Cuban nationals who have permanently relocated outside of Cuba. Funds transfers through the United States for the personal expenditures of employees, grantees and 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 or any intergovernmental organization in which the United States is a member or holds observer status in Cuba are now authorized. New sections have been added to the CACR to authorize persons subject to US jurisdiction to sponsor and participate in third-country professional meetings and conferences that are attended by Cuban nationals and to permit the provision of certain goods and services to Cuban national sailors sequestered aboard ships in US ports.
- Official government business. OFAC expanded an existing authorization to cover all Cuba-related transactions by employees, grantees and contractors of the US government, foreign governments and certain international organizations in their official capacities.
- Cuban official missions. To facilitate the reestablishment of diplomatic relations with Cuba, OFAC added a new CACR section to authorize transactions with Cuban official missions and their employees in the United States.
- Other transactions. OFAC added a new section to the CACR to authorize insurance companies to offer global health, life or travel insurance policies that cover individuals ordinarily resident outside Cuba traveling to Cuba. OFAC also authorized foreign vessels to enter the United States after engaging in certain trade with Cuba.
The US Department of Commerce, Bureau of Industry and Security (BIS) also published conforming amendments to the Export Administration Regulations (EAR) effective January 16, 2015, including the establishment of new export License Exception SCP – Support for the Cuban People. License Exception SCP authorizes:
Export and reexport of commercially sold or donated:
- 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
- Tools, equipment, supplies and instruments for use by private sector entrepreneurs
License Exception SCP also authorizes the export and reexport to Cuba of certain donated items for use in scientific, archaeological, cultural, ecological, educational, historic preservation or sporting activities. It also authorizes the temporary export of certain items by persons departing the United States for their use in scientific, archeological, cultural, ecological, educational, historic preservation or sporting activities or for their use in their professional research. Further, it authorizes the export and reexport to Cuba of certain items to human rights organizations, individuals or non-governmental organizations that promote independent activity intended to strengthen civil society. To improve the free flow of information to, from and among the Cuban people, License Exception SCP authorizes the export and reexport to Cuba of certain items for telecommunications, including access to the Internet, use of Internet services, infrastructure creation and upgrades. Lastly, License Exception SCP authorizes the export and reexport to Cuba of certain items for use by news media personnel and US news bureaus engaged in the gathering and dissemination of news to the general public.
The regulatory amendments are detailed and, in many cases, quite limited. As we observed in our December 22, 2014 International Trade Alert, the US economic embargo against Cuba still remains fully in effect and its provisions must be carefully followed. Full relaxation of the embargo against Cuba requires an Act of Congress. Companies and individuals wishing to take advantage of the opportunities described briefly above should only do so after careful consideration and consultation with corporate compliance officials or counsel.