OFAC Amends Cuba Sanctions to Expand Authorizations for US Persons

OFAC last Friday (September 18) announced certain amendments to the Cuban Assets Control Regulations, 560 CFR Part 515 (CACR) that expand the scope of activities with Cuba permissible for U.S. persons. While the bulk of the CACR remains firmly intact, these very recent provisions dramatically widen the range of authorized transactions and business activities.

So, what’s included? Below is a sampling of many of the new areas.

(1) Travel.  If you recall, OFAC substantially broadened the categories of permitted travel to Cuba for persons under U.S. jurisdiction, although tourism with Cuba is still under very strict limitations.  There are two major points in the most recent changes.  First off, vessel carriers subject to U.S. jurisdiction can now travel to Cuba and provide accommodations on board without having to obtain prior authorization.  Second, certain family members of U.S. individuals traveling to Cuba under a number of authorized travel categories can also accompany or visit that person traveling to Cuba. So, for example, a journalist lawfully traveling Cuba can have his or her spouse accompany him or her.

(2) Financial Transactions. U.S. persons lawfully traveling to Cuba can now maintain bank accounts at Cuban financial institutions to maintain themselves during their stay there.  These accounts obviously need to be later closed.  Restrictions on remittance amounts from the United States have also been limited.  Notably, previously blocked remittance amounts (e.g., those exceeding $500 before the January 2015 changes to the sanctions and those exceeding the $2,000 limit set by those limits) can be unblocked by financial institutions if those transactions would be authorized under the current policy.

(3) Information Technology (IT) and Communications. Companies authorized to provide certain IT and telecommunications services to Cuba will be able to establish physical commercial presences in Cuba for those business operations.  Certain outsourcing to Cuba of coding for mobile applications (“apps”) will be allowed as well as the importation of apps from Cuba, subject to limitations.  The provision of certain other goods and services related to telecommunications is also authorized now.

(4) Commercial Activities. Certain businesses engaged in lawful transactions with Cuba will be able to establish a physical presence on the island to help them engage in their work there.  This includes couriers.  Furthermore, U.S. persons are now authorized to provide goods and services to Cuban nationals outside Cuba.  This is very critical because the regulations previously barred this – there’s an infamous story of a U.S. hotel in Mexico years ago having to eject Cuban guests at a very late hour due to U.S. sanctions.  This appears to now be allowed under Section 515.586 of the CACR.  Many such accommodations can now happen lawfully.   Also interestingly, OFAC has now enabled the provision by persons subject to U.S. jurisdiction of legal services to individuals in Cuba, much akin to an equivalent provision for individuals in Iran, the caveat being that payments for services representing certain parties must be specifically licensed by OFAC.

(5) Humanitarian Activities. A host of humanitarian activities with Cuba are now permitted.  Examples include medical, environmental, and historic preservation projects, and there are more.

Ensuring Compliance

The new changes substantially broaden the scope of business and financial transactions persons subject to U.S. jurisdiction can engage in with Cuba, even compared to the vast amendments that came into pace in January.  That said, the Cuba sanctions are still very much in effect and neither is Cuba completely open to travel by U.S. persons, nor has the embargo on goods and services repealed.  This is critical, because this is where companies and individuals begin to “trip up” and make mistakes.  When the limitations (such as an embargo) are near absolute, people generally avoid any type of activity, even if that activity is permissible under law (notably, I have discussed this at length in the media on issues relating to Iran).  However, as activities ease, people often start obtaining their information and understanding of sanctions from news headlines and general hype, some of which are very positive, promising, and therefore misleading.  This is where violations can start to happen.  As such, keeping on top of these changes and understanding their nuances and terms is absolutely critical.

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An international trade and regulatory lawyer.

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