The Departments of Treasury, Commerce and State are updating regulations that affect financial transactions and trade with Cuba, authorized travel to Cuba, and expand the scope of Cuban government officials with whom transactions are prohibited.
The U.S. Departments of Treasury, Commerce and State are publishing amended regulations in the Federal Register on November 9, 2017, which take effect immediately. The amendments implement President Trump’s June 2017 National Security Presidential Memorandum (NSPM) regarding Cuba.
Major elements include:
The State Department is publishing a list of entities and sub entities that are under the control of, or act on behalf of, Cuban military, intelligence, or security services or personnel and with which direct financial transactions would disproportionally benefit the above entities at the expense of the Cuban people or private enterprise in Cuba (Cuba Restricted List).
In addition, persons subject to U.S. jurisdiction are now prohibited from engaging in certain direct financial transactions with entities and subentities identified by the State Department on the Cuba Restricted List. Certain transactions are excluded from the prohibition pursuant to the NSPM. Commercial engagements in place prior to the State Department’s listing of any entity or subentity will continue to be authorized, as will most previously arranged travel.
The Office of Foreign Assest Control (OFAC) has added a new section (f) to section 515.573 of its Cuba regulations that applies to certain direct financial transactions to the prohibited entities identified by the Department of State. Thus, U.S. persons with a physical presence and business presence in Cuba that are now transacting business in Cuba are also subject to the restrictions set forth in 31 CFR 515.573. The exceptions to this prohibition apply to transactions related to exports or re-exports of agricultural commodities, medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo or trade.
Trade and Commerce
The Department of Commerce’s Bureau of Industry and Security (BIS) is establishing a general policy of denial for license applications to export items for use by entities and subentities on the Cuba Restricted List unless the transaction is otherwise consistent with the NSPM.
BIS is simplifying and expanding its license exception that authorizes certain license-free exports to the Cuban private sector.
As per the NSPM, OFAC now requires that (1) all people-to-people nonacademic educational travel be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote such people-to-people contact, and (2) such travelers be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization. Individual people-to-people nonacademic educational travel is not permitted.
In order to avoid any negative impact on Americans for arranging lawful travel to Cuba, certain people-to-people travel that previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction, such as purchasing a flight or reservation accommodation, prior to the June 16, 2017 NSPM announcement.
Americans engaging in certain authorized educational travel will now be required to do so under the auspices of an organization that is subject to U.S. jurisdiction.
These authorized travelers will be required to be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization, unless the traveler is the representative and obtains a certification letter from the sponsoring organization.
In order to avoid any negative impact on Americans for arranging lawful travel to Cuba, certain educational travel that previously was authorized will continue to be authorized where the traveler completed at least one travel-related transaction prior to the publication of the regulations on November 9.
Support for the Cuban People Travel
As per the NSPM, OFAC will now require that each traveler under this travel category engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba. Such activities must also enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities. Examples of such authorized activities include renting a room in a private Cuban residence, eating at privately owned Cuban restaurants and shopping at privately owned stores run by self-employed Cubans. However, in order to meet the requirement of a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.
As per the NSPM, OFAC is amending the definition of the term “prohibited officials of the Government of Cuba” to include additional individuals. The BIS is making conforming changes to three license exceptions that include the same definition. The change in definition will affect certain otherwise authorized transactions with individuals of the now expanded group.