On January 15, 2015, the U.S. Department of the Treasury’s Office of Foreign Assets Control  (“OFAC”), released revised Cuban Assets Control Regulations (“CACR”) to implement policy changes  announced by President Obama on December 17, 2014.1   The revised regulations, effective January  16, 2015, make relatively modest changes to the existing U.S. sanctions against Cuba. The new regulations:

  • For wire transfers originating and terminating outside the United States by persons not  subject to U.S. jurisdiction (e.g., U.S. dollar transfers between two non-U.S. entities), authorize  depository institutions (which may not include non-insured branches of foreign banks) to:
    • Process funds transfers relating to transactions that would be authorized by the CACR if engaged  in by a person subject to U.S. jurisdiction; and
    • Reject—rather than block—funds transfers involving Cuba if neither a Cuban government official  nor a member of the Cuban Communist Party has an interest in the transfer;

Note that this authorization applies only to “depository institutions,” which is defined to include  institutions with insured deposits or chartered by state or federal authorities.2  On its face, it  is not entirely clear that this definition applies to U.S. branches of non-U.S. financial  institutions that do not have U.S. deposit insurance and, therefore, whether the U.S. dollar clearing activities of such branches of foreign banks benefit from the new rules.

  • Allow depository institutions to open correspondent accounts at Cuban financial institutions  to facilitate processing of authorized transactions (but would not license Cuban financial  institutions to open such accounts at U.S. financial institutions); and
  • Permit all financial institutions to process transactions involving debit and credit cards,  traveler’s checks, and similar instruments by U.S. persons permitted to travel to Cuba (and rely upon the customer to comply with the travel restrictions, unless the financial institution knows or has reason to know that a transaction is not authorized);
  • Provide a general license to deal with Cuban nationals who have permanently relocated outside of  Cuba and who are not Cuban government officials or members of the Cuban Communist Party, if the  participants in the transaction have one of the following:
    • Evidence (such as a passport or national identity card) that the Cuban national has established  residence in another country;
    • o Evidence that the Cuban national has been resident in a single non-Cuban country for at least two  years; or
    • o A sworn statement by the Cuban national that he or she does not intend to (or would not be  welcome to) return to Cuba;
  • Permit U.S.-owned or -controlled entities located in third countries to provide goods and  services to Cuban nationals in third countries provided that the such entities do not directly or  indirectly engage in commercial exportation of such goods and services to or from Cuba;
  • Permit banking institutions, including U.S.-registered brokers or dealers in securities and  U.S.-registered money transmitters, to provide services connected to the collection or forwarding  of authorized remittances;
  • Raise the limit on remittances to Cuban nationals to $2,000 per quarter and the amount of  remittance permitted to travelers to $10,000 per authorized trip;
  • Authorize fund transfers through the United States for personal expenditures of certain  persons affiliated with third-country missions or certain intergovernmental organizations in Cuba;
  • Authorize micro-financing and business training to private businesses and agricultural  operations and certain commercial imports from independent Cuban entrepreneurs;
  • Facilitate permitted travel to Cuba (but do not generally permit U.S. persons to travel to  Cuba without a specific exception) by:
    • Not requiring case-by-case specific licenses for the existing twelve travel categories authorized  in the CACR (which do not include tourism);
    • Permitting persons subject to U.S. jurisdiction, including travel agents and airlines, to provide  authorized travel services without specific licenses; and
    • Eliminating the per diem limit on spending while traveling in Cuba and permitting authorized  travelers to import up to $400 worth of goods (including up to $100 in alcohol or tobacco products)  from Cuba;
  • Authorize additional activities related to enhancing commercial telecommunications and internet communication in Cuba;
  • Expand authorizations related to official government business, including adding authorizations  that permit transactions with Cuban official mission and their employees in the United States; and
  • Allow certain activities related to shipping.

OFAC simultaneously issued new frequently asked questions (“FAQs”) to provide additional  clarification related to the revised Cuban Regulations.  In the FAQs, which primarily focus on  clarifying travel-related issues, OFAC emphasizes that most transactions between persons subject to  U.S. jurisdiction and Cuba remain prohibited.

The loosening of restrictions on dealings with Cuba, together with the planned re- establishment of  diplomatic relations, is an important symbolic and political step.  However, the commercial impact  of the changes announced to date is likely to be modest.  Moreover, while the President has  substantial discretion to modify regulations and license specific activity, lifting the Cuban  sanctions altogether would require statutory authorization, particularly in light of the  codification of Cuban sanctions in the Helms-Burton Act.3