On June 16, 2017, the White House released a Presidential Memorandum (the “Memo”) outlining a new policy regarding travel and business with Cuba. This Memo modifies the Obama administration’s October 2016 Presidential Policy Directive-43, which eased travel and trade restrictions with Cuba. The goal of the new policy as outlined in the Memo is to ensure that funds used for travel and business in Cuba do not “disproportionately benefit the Cuban government” to the detriment of the Cuban people. To that end, it instructs executive agencies to alter current regulations, primarily to restrict tourist travel, require more oversight of travel to Cuba, and ensure alignment with the statutory embargo of Cuba.
The Memo is subject to implementation through the Office of Foreign Assets Control (“OFAC”) at the Department of Treasury and Bureau of Industry and Security (“BIS”) at the Department of Commerce as well as the Departments of State and Transportation. The Memo calls for these agencies and departments to initiate the regulatory process within 30 days, i.e., by July 16. The new regulations will take time to develop and there is currently no deadline for their enactment. Once the regulations are enacted the Secretaries are directed to review their respective Departments’ enforcement of all categories of permissible travel within 90 days. Additionally, President Trump has ordered the Treasury Department to “regularly” audit travel to Cuba to ensure compliance with the enacted statutes and regulations.
The Memo indicates that the administration does not seek to limit investment in Cuba, but rather seeks to channel any investment toward business that will not “disproportionately” support the Cuban government. To this end, the Secretary of State will publish a list of agencies under the control of “the Cuban military, intelligence, or security services or personnel” as well as any entities with which “direct financial transactions” would disproportionately benefit the Cuban government. U.S. persons will not be permitted to engage in transactions with these entities, subject to a limited number of exceptions for transactions that are deemed to be consistent with the overall policy of the Memo.
Both BIS and OFAC have released guidance on their interpretations of the Memo, specifying that they will respond to any new requirements by amending, respectively, the Export Administration Regulations (EAR) and the Cuban Assets Control Regulations (CACR). Both agencies noted that any changes to the EAR or CACR will not take effect until new regulations are issued. BIS and OFAC also specified that any forthcoming amendments will be prospective, not retroactive, and so will not affect contracts and licenses already in place. Similarly, OFAC notes that any Cuba-related commercial engagement that includes direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those commercial engagements were in place prior to the issuance of the forthcoming regulations.
The regulations are not likely to have a significant impact on business travel to Cuba. However, the new regulations will aim to restrict travel licenses on non-business travel to ensure that individuals are not traveling for tourism purposes, but instead legitimate educational purposes, or to provide support for the Cuban people.
Winston and Strawn will continue to monitor the new Cuban regulations developed by the Secretaries of Commerce, Transportation, Treasury, and State, as the enactment of those regulations will signal the actual impact of the Memo.