On January 15, 2015, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) issued final rules amending the Cuban Assets Control Regulations (“CACR”) and the Export Administration Regulations (“EAR”), respectively, to implement key policy changes to the U.S. embargo of Cuba (the “Amendments”). The policy changes were originally announced by President Obama on December 17, 2014 (we reported on the President’s December 17th announcement in a previous blog post). The changes are intended to engage and empower the Cuban people by facilitating authorized travel to Cuba and certain related activities, facilitate the flow of information to, from, and within Cuba, and authorize certain limited activities related to trade with Cuba. Importantly, the U.S. embargo of Cuba remains in effect and most Cuba-related activities continue to be prohibited for parties subject to U.S. jurisdiction. The amendments, which will be effective when published in the Federal Register on January 16, 2015, are limited in nature and in scope. For example, there is no change to the prohibition on travel to Cuba for tourism, License Exception AGR, or the requirement to obtain a specific license to export or reexport medicine and medical devices to Cuba or items necessary for environmental protection (although the Amendments include a new licensing policy of approval for the export/reexport of items necessary for the environmental protection of U.S. and international air quality, waters, and coastlines). More detailed information about the amendments to the CACR and the EAR was made available through the issuance of an OFAC fact sheet, the “OFAC FACT SHEET: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions.” Furthermore, OFAC and BIS have both issued frequently asked questions related to the Amendments. The Amendments authorize the following activities, among others, subject to certain conditions: Travel and Related Services
- Travel within the 12 existing categories of authorized travel (i.e., travel for family visits; official business of the U.S. Government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions) is now authorized by general license without the need for specific licensing.
- Travel agents and airlines are now permitted to provide authorized travel and carrier services without the need for a specific license from OFAC, and U.S. insurers are authorized to provide travel insurance for authorized travel to Cuba.
- Authorized travelers are no longer subject to a per diem rate and there is no specific dollar limit on authorized expenses. Further, authorized travelers are now permitted to use U.S. credit and debit cards in Cuba and may import up to $400 worth of goods (including up to $100 worth of alcohol or tobacco products) for personal use acquired in Cuba.
- Transactions that establish mechanisms to provide commercial telecommunications services in Cuba or linking third countries and Cuba are now generally authorized as is the provision by persons subject to U.S. jurisdiction of additional services incident to internet-based communications and related to certain exports/reexports of communication items.
Financial Services and Remittances
- Depository institutions are now authorized to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions and to permit U.S. financial institutions to reject and process certain funds transfer transactions.
- The limits on remittances to Cuba have been raised and remittances for humanitarian projects, support for the Cuban people, and development of private business in Cuba are now generally authorized.
Other Trade-related Activities
- Certain micro-financing activities, entrepreneurial and business training, and commercial imports of certain goods and services produced by independent Cuban entrepreneurs as determined and published by the State Department are now authorized to promote small business growth in Cuba.
- OFAC has redefined the term “cash in advance” from “cash before shipment” to “cash before transfer of title and control” to allow expanded financing of authorized trade with Cuba.
- Foreign vessels are now authorized to enter the United States after engaging in certain trade with Cuba.
- A new License Exception Support for the Cuban People (“SCP”) has been created in the EAR to authorize the export and reexport to Cuba of, among other items, certain commercially sold items for use in private sector building construction or renovation, agricultural activity, or entrepreneurial activity; certain items for telecommunications; certain donated items and temporary exports of certain items for use in scientific, archaeological, cultural, ecological, education, historic preservation, or sporting activities; and certain items to human rights organizations, individuals, or non-governmental organizations that promote independent activity intended to strengthen civil society.
- License Exception Consumer Communications Devices (“CCD”) in the EAR has been expanded to remove the donation requirement and update the list of eligible items, among other revisions.
Transactions with Cuban Nationals Outside Cuba
- U.S.-owned or -controlled entities in third countries are now authorized to provide goods and services, subject to certain limitations, to Cuban nationals located outside Cuba.
- Accounts of Cuban nationals who have taken up permanent residence outside Cuba are now unblocked.
Persons subject to U.S. jurisdiction are now permitted to sponsor and participate in third-country professional meetings and conferences that are attended by Cuban nationals. By Bart McMillan, Lise Test, Hannah Zarkar (Baker & McKenzie Chicago and Washington D.C.)