On January 28, 2011, the Treasury Department’s Office of Foreign Assets Control (OFAC) issued new rules expanding who can travel to Cuba, easing travel license requirements and increasing permitted remittance amounts. At the same time, the Department of Homeland Security, U.S. Customs and Border Protection (CBP), issued rules that provide a mechanism to expand the number of airports from which aircraft can fly to Cuba.

The Political Landscape

Any relaxation of the U.S. Cuba embargo has the potential to be politically sensitive, so these new rules followed closely after an Obama administration announcement on January 14, 2011 on the easing of travel restrictions. The White House announcement was made late on the Friday afternoon of a holiday weekend, presumably in an attempt to limit controversial press coverage. The easing of restrictions does not appear to be a dramatic change; rather, it principally restores certain travel to Cuba that had been revoked by the Bush administration. The overall impact is likely to be significantly less noticeable than the Obama administration’s 2009 actions that substantially eased travel restrictions for U.S. citizens to visit relatives in Cuba.

Expansion of Portal Airports for Flights to Cuba

Currently, flights to Cuba are only authorized from three U.S. airports: JFK International Airport in New York, Miami International Airport and Los Angeles International Airport. Several cities, including Fort Lauderdale and Tampa, had been petitioning the OFAC to allow flights directly from those cities to Cuba, and their advocacy efforts have been strongly supported by local congressional delegations. Rather than select individual airports, the Obama administration decided to open any U.S. airport for travel to Cuba provided the airport is approved for such service by the CBP.

The CBP application process requires both of the following:

  • The airport must be an international airport (or fall in certain other categories of airport) and have “adequate and up-to-date staffing, equipment and facilities to process international flights.”
  • The airport must have an OFAC licensed Carrier Service Provider (CSP) that is licensed to organize flights between the airport and Cuba. CSPs act as charter operators, selling tickets and screening passengers, with flights actually flown by FAA licensed air carriers.

There is no timeline for the application process, so it is unclear how long it will take CBP to process new applications. Further, it is unclear what level of commitment to provide flights CBP will require. For airports that are near large Cuban American populations, this may be a much easier sell to CBP than for other areas, because Cuban Americans who are traveling to Cuba to visit relatives on the island will likely continue to make up the majority of those flying to Cuba. Also, it is important to note that there is no indication that the administration is considering removing the requirement for travel to be arranged through licensed CSPs or to remove the prohibition on “scheduled” air service to Cuba.

Expansion of Certain Categories of Travel to Cuba

The new regulations also add to the categories of persons who can travel to Cuba, either by use of a general license (meaning no prior OFAC authorization is required) or by means of a specific license (meaning a request for authorization to conduct the travel must be approved by OFAC).

The easing of restrictions are particularly noteworthy for educational and exchange programs:

  1. Travel as a Course of Study
  • Under the previous regulation, educational travel was permitted only pursuant to a specific license for “full-time permanent” employees of and students enrolled at certain licensed institutions. OFAC has now granted a general license authorizing accredited U.S. undergraduate and graduate institutions to engage in travel to Cuba for educational purposes, including all members of the institution’s staff (including part-time and adjunct faculty).
  • A student may now travel with any U.S. academic institution, not just the one where the student is pursuing his or her degree, and the “duration of study” requirements have been removed. The student must be able to demonstrate that the course of study will result in academic credit being granted and must have an authorizing letter from the sponsoring U.S. academic institution.
  • OFAC will now consider granting specific licenses to academic institutions for other types of educational activities, such as academic seminars, conferences or workshops to be held in Cuba.
  • U.S. academic institutions are now permitted to open up accounts in Cuban financial institutions in furtherance of academic travel expenditures.
  • The rules continue to prohibit “self-directed educational activities that are intended only for personal enrichment,” so it is crucial that an accredited U.S. academic institution be involved in any travel under this section.
  1. People-to-People Exchange Programs.

OFAC will now consider granting a specific license for so-called “people-to-people exchange” programs. Such a license was previously available but was removed by the Bush administration. This specific license authorizes educational exchanges not involving academic study when the trips are sponsored by an organization that promotes people-to-people exchange programs.

  1. Travel by Religious Institutions

The specific license for religious travel is now replaced by a general license, with the option of obtaining a specific license for religious activities that are not covered under the general license. To qualify for the general license, travel must be sponsored by a religious organization located in the United States, be limited to members and staff of such the institution, and must only include transactions directly incident to religious activities in Cuba and for the purpose of engaging, while in Cuba, in a full-time program of religious activities. Covered transactions would include costs of travel and per diem living expenses while in Cuba. When utilizing this provision, religious organizations may open and maintain a bank account at a Cuban financial institution for the purpose of accessing funds while in Cuba.

Remittance Limits Increased

The ability to send cash payments to Cuban individuals or entities has been increased by an easing of the remittance restrictions. Under the new regulations:

  • U.S. persons may now send up to $500 per calendar quarter to any Cuban national, with the exception of certain Cuban government officials and members of the Communist Party. This is an additional easing of the remittance rules, which were relaxed by the Obama administration in 2009 to allow unlimited remittances to close relatives in Cuba.
  • U.S. persons and entities may now make cash remittances to religious organizations in Cuba if the remittances are made in support of religious activities. The size and frequency of such remittances is not limited.

Third-Country Cuban Immigrants

The OFAC regulations have also been relaxed regarding Cubans who have left Cuba and who have taken up permanent residence in a third country. Under the pre-existing rules, those individuals had to obtain an “unblocked national” license from OFAC before transacting business in the United States. Under the new rules, such persons will be deemed “unblocked nationals” and will not need to obtain a specific license in order to conduct such business, such as opening a U.S. bank account. However, property in which these individuals have an interest that was blocked as of January 28, 2011 (or subsequently under other OFAC regulations) will remain blocked and a license will have to be obtained if a U.S. person is involved with such property.

Conclusion

These new rules are clearly part of an ongoing strategy by the Obama administration to gradually dismantle the Cuba embargo while encouraging local Cuban popular support for the move toward normalizing relations with the United States. How far the liberalization of the embargo will go depends on a number of factors, including the Cuban response to these gestures, and the political reaction in the United States to the adminisration’s initiatives, particularly with the 2012 election cycle on the horizon.