On September 9, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published amendments to the Cuban Assets Control Regulations (“CACR”) to further implement President Trump’s June 2017 National Security Presidential Memorandum Strengthening the Policy of the United States Towards Cuba (“NSPM”). The amendments, which appear in the Federal Register as a final rule that becomes effective October 9, 2019, prohibit “U-turn” financial transactions related to Cuba and impose limitations on remittances to Cuban nationals. These rule changes represent yet another step by the Trump Administration to reverse the Obama Administration’s loosening of U.S. sanctions on Cuba.

Among other changes, the September 9 amendments’ most significant elements include:

“U-Turn” Transactions

  • OFAC has eliminated the Obama Administration’s authorization for certain Cuba-related U-turn transactions, which originate and terminate outside the United States but are processed by a U.S. banking institution (e.g., because the transaction involves payment in U.S. dollars). This new rule significantly limits non-U.S. companies’ ability to engage in U.S. dollar transactions involving Cuba. Under the new rules, banking institutions subject to U.S. jurisdiction are authorized to reject, rather than block, such transactions, subject to OFAC’s reporting requirements. For additional information about OFAC’s recent interim final rule expanding the reporting requirements for “rejected transactions” and “blocked transactions,” please see our July 19, 2019 blog post.

Remittances

  • Family Remittances: OFAC has placed a cap of $1,000 U.S. dollars per quarter on remittances that a Cuban-American may send to a Cuban national family member. Under the Obama-era CACR, there were no limits on the dollar amounts or frequency of remittances to Cuban family members. In addition, the September 9 amendments completely prohibit remittances to Cubans who are close relatives of prohibited officials of the Government of Cuba or close relatives of prohibited members of the Cuban Communist Party (i.e., members of the Politburo).
  • Donative Remittances: The September 9 amendments eliminate entirely the Obama-era authorization for donative (non-family) remittances to Cuban nationals.
  • Remittances to Certain Individuals and Independent Non-Governmental Organizations in Cuba: Consistent with the NSPM’s policy to encourage the growth of the Cuban private sector independent of Cuban government control, OFAC has added a provision authorizing remittances to “support the development of private businesses, and operation of economic activity in the non-state sector by self-employed individuals.” The term “self-employed individual” includes “(a) an owner/employee of a small private business or sole proprietorship, including restaurants (paladares), taxis, and bed-and-breakfasts (casas particulares); (b) an independent contractor or consultant; (c) a small farmer who owns his or her own land; or (d) a small usufruct farmer who cultivates state-owned land to sell products on the open market.” This authorization is available only where the recipient is not a prohibited official of the Government of Cuba, a prohibited member of the Cuban Communist Party, or a close relative of such an official or member.

OFAC concurrently published updated FAQs related to Cuba, which include additional guidance regarding the September 9 amendments.