On December 17, 2014, President Obama announced a major shift in the Administration's foreign policy toward Cuba.  Citing the failure of the current sanctions regime to promote democracy in Cuba and the absence of other nations in enacting similar sanctions, the President announced that the Administration would undertake a number of new measures, including re-establishing diplomatic relations between the two countries, setting up a U.S. embassy in Cuba, examining Cuba's status as a state supporter of terrorism, and loosening the current U.S. sanctions against Cuba and Cuban nationals.

The announcement, coming on the heels of the release of two Americans imprisoned in Cuba and three Cuban agents imprisoned in the United States, identified the following changes, among others, aimed at easing the sanctions currently administered by the U.S. Department of the Treasury, Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce, Bureau of Industry and Security ("BIS"):

  • Remittance levels will be raised from $500 to $2000 and the remittance forwarders no longer will require a license to forward money to Cuba;
  • Exports of “building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment” will be permitted;
  • General licenses will be issued for travelers in the 12 current categories of authorized travel (which do not include going to Cuba for general tourism);
  • Travelers will be able come back to the United States with $400 in goods, of which only $100 will be able to be alcohol or tobacco products;
  • Banks will be able to open correspondent accounts in Cuban financial institutions to facilitate authorized transactions;
  • Sales of cash against documents of title (e.g., bills of lading) will be permitted for authorized exports and  the old rule that cash had to be paid prior to the shipment of the goods will be removed;
  • U.S. companies will be able to invest in infrastructure for commercial telephone and internet services in Cuba; and
  • Foreign vessels engaging in humanitarian trade with Cuba will be able to enter U.S. ports immediately and not be subject to the 180-day waiting period under the current rules.

In response to the President's announcement, OFAC issued an FAQ indicating that it will implement Treasury-specific changes to the sanctions through amendments to the Cuban Assets Control Regulations in 31 CFR Part 515.  OFAC warned that none of the announced changes will take effect until the new regulations are issued.

In addition to awaiting for OFAC and BIS to revise the relevant regulations, the Administration is also facing backlash from members of Congress who disagree with this change in policy.  Several members of Congress, including Speaker of the House John Boehner and Senators Lindsay Graham and Marco Rubio, have indicated that they intend to block the new policy entirely, including the use of funds to open a U.S. embassy in Cuba.

It appears that only time will tell the precise effect of this announced change in policy  - and whether it will be effective to accomplish the stated goals.