The Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the Department of Commerce’s Bureau of Industry and Security (“BIS”) jointly announced on September 21, 2015, that each was taking further steps to relax sanctions against Cuba. While these changes, which follow the partial relaxation of the near-total embargo on that island nation in January of 2015, represent a further shift in U.S. sanctions policy towards Cuba, those hoping to freely travel to, or do business in, Cuba will find that most sanctions provisions still remain in place. Any contemplated activity with respect to Cuba will continue to need to be carefully evaluated before proceeding.
OFAC and BIS deliberately targeted a limited range of sectors for sanctions relief in January and the most recent changes are generally limited to those areas as well. OFAC and BIS also made efforts to clean up and harmonize provisions from the January revisions. The most significant changes are summarized below:
Travel Within One of Twelve Authorized Categories:
- Travelers headed to Cuba using one of the twelve authorized categories of travel will now be able to arrive by sea: an OFAC general license and BIS license exception will permit vessels to transport authorized travelers between the United States and Cuba only, no third country stops will be allowed. Those vessels may remain in Cuba for up to 14 days; aircraft transporting authorized travelers may remain for up to 7 days.
- Close relatives of authorized travelers will be able to accompany those authorized travelers on certain trips to Cuba.
- Authorized travelers will be allowed to open, maintain and close bank accounts while in Cuba.
Telecommunications and Internet-Based Services:
- S. telecommunications companies and U.S. providers of Internet-based may establish a business presence in Cuba, including by entering into joint ventures with Cuban entities. Licensing arrangements for these services are permitted.
- Cuban-origin mobile applications may be imported to the United States, and Cuban nationals may be hired to develop such apps.
- The range of services that may be provided in relation to certain consumer communications devices is increased.
Commercial and Financial Transactions:
- S. companies and individuals will be allowed to provide goods and services to Cuban nationals outside of Cuba, and banks may open accounts for Cuban nationals while those nationals are outside of Cuba.
Physical Presence and Operations in Cuba:
- In addition to U.S. persons and companies providing telecommunication services to Cuba, those performing certain other authorized activities (g., journalism, exporting authorized goods to Cuba, educational and religious activities, and authorized travel services) may establish physical presence in Cuba, including employing U.S. and Cuban nationals, and opening bank accounts in Cuba.
License Exception Support for the Cuban People (SCP):
- BIS License Exception SCP is expanded to allow exports to Cuba of items related to activities permitted by OFAC, such as those necessary to establish a business presence, those related to certain types of authorized travel, and items and software used for software development.
- BIS License Exception SCP is modified to allow for provision of leased (and other) items, rather than limiting exports to those items that are sold or donated.
- Limits on remittances to Cuban nationals other than government or communist officials, as well as limits on how much money may be carried to Cuba, are removed. Remittances that were previously blocked because they exceeded previous limits will be unblocked.
- Restrictions on bank accounts for Cuban nationals in the United States are eased.
- Remittances from Cuba and Cuban nationals to the United States are permitted, and additional remittances to Cuba in connection with the administration of estates are permitted.
- In addition to being permitted to provide legal services to Cuba and Cuban nationals, an expanded OFAC General License will allow payment for those services.
Civil Aviation Safety:
- BIS will now consider, on a case-by-case basis, licenses for the export to Cuba of items to ensure the safety of civil aviation, including airplane parts, air traffic control and weather equipment and passenger security and screening devices. Re-exports of such items with less than 100% (but more than 25%) U.S. content will also require an OFAC license. The new OFAC rules do not set forth any change in OFAC licensing policy.
- Certain educational services, including standardized testing, Internet-based courses, and academic exchanges with Cuban universities are permitted.
Other limited provisions apply to Cuban-origin gifts, air ambulance and emergency medical services, humanitarian projects and diplomatic operations in Cuba. Of note, OFAC also took steps to clarify that all transactions ordinarily incident and necessary to give effect to an authorized transaction are permitted. This is not a change in policy, but merely a clarification. Because there is no definition or clarification of what transactions are “ordinarily incident and necessary to give effect to an authorized transaction,” careful legal analysis is necessary before embarking on any such transactions.
Those hoping to rush into Cuba to participate in a bonanza 90 miles from Florida would do well to proceed carefully and cautiously. They might also recollect that President Obama is limited in the actions he can take vis-à-vis Cuba and that a complete end to the embargo can only be effected by Congress.