On the afternoon of June 16, 2017, shortly before President Donald Trump announced new changes to the U.S.-Cuba policy, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued 12 frequently asked questions (FAQs) explaining the scope and implementation process of the changes. This alert provides a brief summary of these changes and the new FAQs:
How and When Do the Changes Take Place?
OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations (CACR). The U.S. Department of Commerce will implement any necessary changes via amendments to its Export Administration Regulations (EAR). The U.S. Department of State will be publishing a list of entities with which direct transactions generally will not be permitted.
The new FAQs make clear that the changes announced on June 16, 2017, do not take effect until the Treasury and Commerce departments issue amendments to the CACR and the EAR, respectively. The FAQs also note that revised regulations will be prospective and thus will not affect existing contracts and specific licenses.
The FAQs do not provide a term for the changes to the regulations to be issued. However, they set forth that OFAC expects to issue its regulatory amendments in the coming months.
Individual people-to-people travel (e.g., educational travel that 1) does not involve academic study pursuant to a degree program and 2) does not take place under the auspices of an organization subject to U.S. jurisdiction that promotes people-to-people contact) will be prohibited.
The announced changes do not take effect until OFAC issues new regulations. However, persons subject to U.S. jurisdictions must not initiate any travel arrangements for individual people-to-people travel to Cuba after June 16, 2017. If the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodations) prior to the president's announcement on June 16, 2017, all additional travel-related transactions for that trip, whether the trip occurs before or after OFAC's new regulations are issued, would also be authorized, provided the travel-related transactions are consistent with OFAC's regulations as of June 16, 2017.
Group people-to-people travel (e.g., educational travel not involving academic study pursuant to a degree program that takes place under the auspices of an organization subject to U.S. jurisdiction that promotes people-to-people contact) will remain authorized, provided that travelers comply with all other people-to-people general license's existing requirements.
Other Travel Categories and Travel-Related Transactions
Other than individual people-to-people travel, the new policy will not affect the other currently authorized travel categories. Also, the new policy will not change how persons subject to U.S. jurisdiction traveling to Cuba pursuant to the 12 categories of authorized travel may purchase their airline tickets.
Any travel-related arrangements that include direct transactions with entities related to the Cuban military, intelligence or security services (Prohibited Entities) that may be implicated by the new Cuba policy will be permitted, provided that those travel arrangements were initiated prior to the issuance of the forthcoming amended OFAC regulations.
Following the issuance of the amended OFAC regulations, travel-related transactions with Prohibited Entities (which will be identified in a list by the State Department) will not be permitted. This may impact an authorized traveler's ability to pay for lodging and/or restaurant charges if such transactions are for the benefit of prohibited entities.
Business Transactions Involving Entities Under the Cuban Military Structure
Any Cuba-related commercial engagement that includes direct transactions with Prohibited Entities 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 amended OFAC regulations.
This means that any agreements or transactions executed, for example, with Gaviota, S.A. or any other entity of Grupo de Administración Empresarial S.A. (GAESA), both of which are under the structure of the Cuban Ministry of the Armed Forces (MINFAR), before the date of issuance of the new OFAC regulations that will prohibit direct engagement with such Prohibited Entities will remain authorized.
The announced policy changes will not change the authorizations for sending remittances to Cuba. Additionally, it is expected that the amended regulations will include an exception that will allow for transactions incidental to the sending, processing and receipt of authorized remittances to the extent they would otherwise be restricted by the new policy limiting transactions with the Prohibited Entities.
As the revised regulations are implemented, it is likely that further clarifications – and possibly adjustments – will be necessary.