The US Department of the Treasury, Office of Foreign Assets Controls (“OFAC”), has amended the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. Part 515, promulgating general licenses and specific licenses to authorize certain activities, transactions, and dealings in support of the Cuban people. The changes are effective with the force of law as of January 28, 2011 (76 Fed. Reg. 5072-5078), and apply to persons “subject to the jurisdiction of the United States,” including (1) any US citizen or permanent resident, wherever located; (2) any entity organized under the laws of the United States, and that entity’s owned or controlled foreign affiliate(s); and (3) any person or entity located in the United States, regardless of nationality or domicile (collectively, “US Persons”).
OFAC amended the CACR to implement certain policy changes announced by the President on January 14, 2011 to continue outreach efforts to the Cuban people. These changes complement the CACR amendments of September 3, 2009 that ease certain travel, telecommunications, and remittance restrictions concerning Cuba, as described in our prior advisory. The final rule published by OFAC adds general licenses and specific licenses to promote US Persons participating in expanded educational, cultural, religious, and journalistic activities in Cuba, making certain remittances to Cuba and permitting certain transactions with Cuban nationals who have become permanent residents of third countries. However, tourist-related or -oriented travel transactions will not be authorized. Additionally, several new notes to the general licenses caution that, even if travel-related transactions are licensed, exports of US-origin items, including the transfer of technology or software to foreign persons in the United States, known as “deemed exports,” may require separate authorization from the US Department of Commerce.
Educational Travel-Related Transactions
A new general license at § 515.565(a) authorizes accredited US graduate and undergraduate degree-granting academic institutions to engage in travel-related transactions directly involving: (1) participation in a structured educational program in Cuba as part of a course offered for credit by the sponsoring US academic institution; (2) noncommercial academic research in Cuba specifically related to Cuba and for the purpose of obtaining a graduate degree; (3) participation in a formal course of study at a Cuban academic institution, provided the formal course of study in Cuba will be accepted for credit toward the student's degree; (4) teaching at a Cuban academic institution by an individual regularly employed in a teaching capacity at the sponsoring US academic institution; (5) sponsoring a Cuban scholar to teach or engage in other scholarly activity at a US academic institution, including the payment of a stipend or salary; and (6) the organization of, and preparation for, activities described in (1) through (5) by the US academic institution’s faculty and staff.
The general license permits all members of the faculty and staff (e.g., adjunct faculty and part-time staff) of a sponsoring US academic institution to travel to Cuba, and allows students to participate in academic activities in Cuba through any sponsoring US academic institution, not only those through the US academic institution at which the student is pursuing a degree. Students are no longer required to participate in a structured educational program in Cuba or a formal course of study at a Cuban academic institution lasting longer than 10 weeks. However, students must carry a letter on official letterhead, signed by a “designated representative” of the sponsoring US academic institution (e.g., a person named by the relevant dean, academic vice-president, provost, or president as responsible for overseeing the institution's travel program) stating that the study in Cuba must be accepted for credit toward the student's degree.
US Persons also may apply for specific licenses to travel to Cuba for educational purposes that are not generally authorized. Section 515.565(b) states a policy to permit travel-related transactions for US accredited, degree-granting academic institutions to sponsor or co-sponsor academic seminars, conferences, and workshops related to Cuba or global issues involving Cuba, or educational exchanges not involving academic study pursuant to a degree program when those exchanges take place under the auspices of an organization that sponsors and organizes such programs to promote people-to-people contact. Faculty, staff, and students of such institutions are allowed to attend those events. Self-directed educational activities that are “intended only for personal enrichment” will not be specifically licensed.
A new note allows US academic institutions to open accounts at Cuban financial institutions only for the purpose of accessing funds in Cuba for transactions authorized pursuant to § 515.565.
Religious Organization Travel-Related Transactions
A new general license at § 515.566(a) authorizes religious organizations located in the United States, including members and staff, to engage in travel-related transactions that are incident to religious activities in Cuba. Such travel-related transactions must be for the purpose of engaging, while in Cuba, in a “full-time program” of religious activities. All individuals who engage in such transactions under the general license must carry a letter on official letterhead, signed by a “designated representative” of the US religious organization, confirming that they are members or staff of the organization and are traveling to Cuba to engage in religious activities under the auspices of the organization. Financial and material donations to Cuba or Cuban nationals are not authorized, but see § 515.570(c).
Section 515.566(b) provides that specific licenses may be issued to authorize travel-related transactions incident to religious activities that are not authorized by the new general license. The specific license application must provide examples of religious activities to be undertaken in Cuba. A specific license may be issued authorizing transactions for multiple trips over an extended period of time to engage in a “full-time program” of religious activities in Cuba, the meaning of which is not defined.
A new note allows US religious organizations to open accounts at Cuban financial institutions only for the purpose of accessing funds in Cuba for transactions authorized pursuant to § 515.566.
Freelance Journalism Travel-Related Transactions
Amendments to § 515.553(b) provide that a specific license may be granted on a case-by-case basis to authorize travel related transactions directly incident to a freelance journalistic project. A written application for such a license should include a: (1) detailed itinerary and description of proposed journalistic activities; (2) resume showing a record of journalism; and (3) demonstration of how the activities constitute a full work schedule that could not be accomplished in a shorter period of time. Multiple trips over an extended period of time may be authorized.
Other Travel-Related Transactions for Specific Licenses
Section 515.567 promotes a policy of specific licensing, on a case-by-case basis, for travel-related transactions incident to participation in public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, provided that: (1) the event is open for attendance, and in relevant situations, involves participation by the Cuban public; (2) all US profits from the event (after costs) are donated to an independent nongovernmental organization in Cuba or a US-based charity, with the objective of promoting people-to-people contacts or otherwise benefiting the Cuban people; and (3) any clinics or workshops in Cuba must be organized and run, at least in part, by the licensee.
OFAC amended § 515.570 to implement several policy changes regarding remittances to Cuba.
Subsection (a) provides that US Persons are generally authorized to make remittances to a “close relative”, as defined by § 515.339, that is a Cuban national. No remittance limit is imposed by the provision.
New subsection (b) contains a general license authorizing US Persons to remit up to $500 per quarter to any Cuban national, including but not limited to supporting the development of private businesses.
New subsection (c) adds a general license to authorize unlimited remittances by any US Person to religious organizations in Cuba in support of religious activities. Prior to this amendment, remittances to religious organizations in Cuba required a specific license.
New subsection (d) adds a general license to authorize remittances to close relatives who are students in Cuba pursuant to an educational license for the purpose of funding transactions authorized by the license under which the student is traveling.
Remittances authorized under §§ 515.570(a)-(d) cannot be made: (1) from a blocked source [but see subsection (f)], (2) to a recipient who is a prohibited official of the government of Cuba or Cuban Communist party; or (3) for emigration-related purposes [but see subsection (e)]. If a US Person is an individual, he or she must be at least 18 years of age to conduct such remittances. Note that under § 515.560(c)(4), remittances authorized under §§ 515.570(a)-(d) may be hand-carried to Cuba by licensed travelers, but such remittances may not exceed a total of $3,000.
Subsection (e) authorizes US Persons to remit up to $1,000 per payee on a one-time basis to Cuban nationals for covering the payees' preliminary expenses associated with emigrating from Cuba to the United States. Such funds may be sent before the payees have received valid visas or documentation issued by US government, but may not be carried by a licensed traveler to Cuba until the payees have received valid visas or immigration documentation. US Persons also are generally authorized to remit an additional $1,000 per payee on a one-time basis to Cuban nationals for enabling the payees to emigrate from Cuba to the United States, including to pay for airline tickets, exit or third-country visa fees, or other travel-related fees. These remittances may be sent only once the payees have received valid visas or immigration documentation issued by the US Government; such a remitter must be able to provide the visa recipients’ full names, dates of birth, visa numbers, and visa dates of issuance.
Subsection (g) generally authorizes remittances of funds from a blocked source or account in the Unites States held in the name of, or in which the beneficial interest is held by, a “national” of Cuba. The interest must arise as a result of a valid testamentary disposition, intestate succession, or payment from a life insurance policy or annuity contract triggered by the death of the policy or contract holder, provided that such a remittance is made to a close relative of the decedent or for emigration-related purposes. The general license does not apply if the recipient is an official of the government of Cuba or Cuban Communist Party.
Newly redesignated § (g)(1) has been revised to clarify that US Persons may apply for specific licenses to authorize remittances to individuals or independent nongovernmental entities to support the development of private businesses, including small farms.
A new note states that US Persons are prohibited from engaging in the collection or forwarding of remittances to Cuba unless authorized pursuant to § 515.572, i.e., travel service, carrier service, and remittance forwarding service providers.
Transactions with Certain Cuban Nationals
Section 515.505(d) adds a general license to authorize certain transactions with individual nationals of Cuba who have are permanent residents of third countries, i.e., outside of Cuba or the United States. US Persons may engage only in prospective transactions with such individuals as if they were unblocked Cuban nationals. All property in which such Cuban nationals have an interest that was blocked pursuant to the CACR prior to the later of (1) the date on which the individual took up permanent residence outside of Cuba or (2) January 28, 2011, however, remains blocked.
To determine whether an individual Cuban national has taken up permanent residence outside of Cuba, US Persons are required to collect copies of at least two documents issued to the individual by the government authorities of the new country of permanent residence, such as a passport, voter registration card, permanent resident alien card, or national identity card. If these types of documents are unavailable, other information must be considered, such as evidence that the individual (1) has been residing for the past two years without interruption in a single country outside of Cuba or (2) does not intend to, or would not be welcome to, return to Cuba. New subsection (f)(4) furnishes an example illustrating the application of this general license.
These changes represent a significant easing of Cuban sanctions, but in a targeted manner. While these amendments demonstrate a loosening of strict limitations on travel and remittance-related transactions with Cuba, as well as dealings with Cuban nationals who are permanent residents of third countries, certain aspects of the regulations could present compliance obligations and challenges. Although the changes undoubtedly represent a further easing of US economic sanctions against Cuba, a more comprehensive liberalization of the trade restrictions will depend on how the existing Cuban regime responds to the administration’s initiative.