In advance of President Obama's upcoming visit to Cuba next week, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") and the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") announced additional changes to the Cuban Assets Control Regulations ("CACR") (31 C.F.R. Part 515) and the Export Administration Regulations ("EAR") (15 C.F.R. Parts 730-774). These changes build on similar, recent amendments to further implement the Obama administration's policy of fostering direct engagement with the Cuban people by easing restrictions on travel to Cuba and commercial activity with Cuban parties.
These amendments to the CACR and EAR are focused on facilitating travel to and providing a physical commercial presence in Cuba and also for making possible additional transactions in U.S. dollars. The new provisions also ease restrictions on the import or consumption of certain Cuban-origin items and facilitate exports by Cuba's private sector. Below is a description of the announced changes to the CACR and the EAR:
Travel, Physical Presence, and Related Transactions:
- Individual Travel: OFAC has authorized individuals to travel to Cuba as long as the traveler engages in a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities, and result in meaningful interaction between the traveler and individuals in Cuba. Previously, the CACR required such trips to take place under the auspices of an organization that was subject to U.S. jurisdiction and required all travelers to be accompanied by a representative of the sponsoring organization. As before, the predominant portions of such activities must not occur with or involve certain Government of Cuba personnel or Cuban Communist Party officials.
- Payment of Salaries: OFAC has removed the limitation for Cuban nationals present in the United States in a non-immigrant status or pursuant to other non-immigration travel authorization issued by the U.S. government on receiving compensation in excess of amounts covering living expenses and the acquisition of goods for personal consumption. With these amendments, OFAC has authorized the receipt of any salary or other compensation consistent with the individual's non-immigration status or travel authorization, provided that the recipient is not subject to any special tax assessment by the Cuban government in connection with the receipt of such salary or other compensation.
- Cuban Nationals Working in the U.S.: OFAC has authorized the sponsorship or hiring of a Cuban national to work in the United States, provided that the employer does not make additional payments to the Cuban government in connection with the sponsorship or hiring.
- Dealing in Merchandise, Including Cuba-Origin Goods for Personal Use:OFAC has authorized persons subject to U.S. jurisdiction located in a third country to purchase or acquire Cuban-origin goods for personal consumption while there and to receive or obtain services from Cuba or a Cuban national that are ordinarily incident to travel and maintenance within a third country.
- Business Presence:OFAC has expanded the authorization of persons subject to U.S. jurisdiction to establish and maintain a business presence in Cuba, including through subsidiaries, branches, offices, joint ventures, franchises, and agencies with Cuban individuals or entities, to the following categories:
- Exporters of goods for export or re-export to Cuba authorized by the CACR;
- Entities providing mail or parcel transmission services or cargo transportation services in connection with trade involving Cuba authorized by or exempt from the CACR; and
- Providers of travel and carrier services authorized by the CACR.
- Physical Presence:OFAC has expanded the authorization allowing certain persons subject to U.S. jurisdiction to establish a physical presence in Cuba to facilitate authorized transactions, such as an office or other facility, to the following additional categories:
- Entities engaging in non-commercial activities authorized by the CACR;
- Entities engaging in humanitarian projects set forth in the CACR; and
- Private foundations or research or educational institutes engaged in transactions authorized by the CACR.
Financial Transactions and Trade:
- U-Turn Payments: OFAC has authorized U.S. banking institutions to process "U-turn" transactions in which Cuba or a Cuban national has an interest. This means that U.S. banks may now process funds transfers in which Cuba or a Cuban national has an interest that originate outside the U.S., pass through one or more U.S. financial institutions, and return outside the U.S., provided that neither the originator nor the beneficiary are subject to U.S. jurisdiction. For example, this makes it possible for a non-U.S. purchaser of a product from Cuba to direct its non-U.S. bank to deposit U.S. dollars obtained from a U.S. bank into a second foreign bank for the direct or indirect benefit of Cuba or a Cuban national.
U.S. banking institutions are also authorized to unblock and return to the originator, the originating financial institution, or their successor-in-interest any previously blocked funds transfers if the blocked transfers were U-turn transactions that would have been authorized under this amended provision.
- U.S. Dollar Monetary Instruments: OFAC has authorized U.S. banks to accept, process, and give value to U.S. dollar monetary instruments, including cash and travelers' checks, presented for payment and processing indirectly by a Cuban financial institution through a third-country bank. This authorization does not allow U.S. banks to open correspondent accounts for Cuban banking institutions.
- Cuban Nationals' Bank Accounts: OFAC has authorized U.S. banks to open and maintain certain accounts in the name of Cuban nationals in Cuba. These accounts must be only for receiving payments in the U.S. in connection with activity authorized under the CACR and remitting those payments to Cuba.
- Software: In addition to authorizing the import into the U.S. of Cuban-origin mobile applications, the CACR has been amended to authorize the import into the U.S. of Cuban-origin software.
- Shipping: BIS has amended License Exception Aircraft, Vessels and Spacecraft (AVS) in the EAR to allow vessels carrying cargo destined for countries other than Cuba to stop temporarily in Cuba without obtaining a license for that cargo to transit through Cuban territory. The cargo must leave Cuba with the vessel on which it arrived, must not enter the Cuban economy, and must not be transferred to another vessel while in Cuba.
- Exports from Cuba: BIS has revised the EAR's licensing policy to adopt a policy of case-by-case review of license applications to export or re-export items that would enable or facilitate exports from Cuba of items produced by Cuba's private sector.
Grants and Awards:
- OFAC has authorized the provision of educational grants, scholarships, or awards to a Cuban national or in which Cuba or a Cuban national otherwise has an interest.