On January 16, 2015, the Obama administration relaxed the U.S. economic sanctions against Cuba in various targeted ways. While Cuba is not yet “open for business,” U.S. and Cuban persons may now engage in a variety of activities that were previously restricted or prohibited. And further changes are possible in light of pending legislation, ongoing diplomatic negotiations with the Cuban government, and the State Department’s review of Cuba’s designation as a State Sponsor of Terrorism.
Changes to the Cuban Assets Control Regulations
The Department of the Treasury’s Office of Foreign Assets Control issued new rules amending the Cuban Assets Control Regulations to allow a variety of transactions to facilitate select travel to Cuba, support for the Cuban people, and communication and exchange with Cuba.
Travel. Twelve categories of travel that are currently authorized by application for a specific license are now authorized by a general license, which requires no application. The categories include educational activities, family visits, journalistic activity, humanitarian projects, and research activities, among others. Tourist activities remain prohibited by statute.
Travel Services. Travel agents and airlines subject to U.S. jurisdiction are now authorized to provide certain travel and carrier services and to forward certain remittances under a general license. While the new OFAC regulations will no longer prohibit scheduled air service, such services will require procedures to be established by the U.S. Department of Transportation.
Spending in Cuba. Previous limits on per diem spending no longer apply for transactions ordinarily incident to travel authorized under a general license.
Travel Insurance. Companies subject to U.S. jurisdiction are authorized to issue travel insurance policies to individuals traveling to or within Cuba.
Remittances. The amount of permissible remittances was increased across all previously allowed categories, though some restrictions remain.
Credit and Debit Card Use. U.S. credit and debit cards may now be used in Cuba for authorized activities. Banks are not required to permit activities in Cuba, so travelers are advised to check with their financial institution regarding its current policies.
Financial Services. Under a new general license, U.S. banks and credit unions are allowed to open correspondent accounts at Cuban financial institutions in order to facilitate authorized transactions.
Import and Export of Goods and Services
Imports for Personal Use. Individuals traveling to Cuba for a valid purpose may now import Cuban goods valued at up to $400 to the United States for personal use only. As has been widely covered, this includes up to $100 in alcohol or tobacco products.
Microfinance and Support for Cuban Entrepreneurs. Individuals are now eligible for general licenses to support humanitarian projects in Cuba, including some microfinance and support for private Cuban businesses.
Limited Imports from Cuban Entrepreneurs. Once pending regulations are implemented, persons subject to U.S. jurisdiction will be authorized to engage in all transactions necessary to import certain goods and services produced by private Cuban entrepreneurs.
Expanded Interpretation of “Cash in Advance.” To allow expanded financing for certain authorized exports to Cuba, the definition of “cash in advance” has changed from “cash before shipment” to “cash before transfer of title and control.”
Telecommunications Services. Under two expanded provisions, a general license authorizes transactions incident to establishing and providing telecommunications services in Cuba to link the United States or third countries with Cuba, and transactions incident to providing internet-based communications.
Transactions with Cuban Nationals Outside of Cuba. A variety of regulations were added or revised to allow the provision of certain goods and services to Cuban nationals living outside Cuba and Cuban sailors on ships in U.S. ports.
Transactions by Government Officials in Cuba. U.S. and foreign government officials have expanded authorization to engage in all transactions for the conduct of the official business of their government in Cuba.
Changes to the Export Administration Regulations
The Department of Commerce’s Bureau of Industry and Security promulgated new rules authorizing exports to Cuba under several provisions. To support the expansion of the private economy in Cuba, License Exception Support for the Cuban People authorizes exports of building materials, tools, and equipment to support the activities of Cuban entrepreneurs in several areas, including construction, agriculture, and hospitality. License Exception SCP also authorizes exports of donated items for use in educational, cultural, and research activities and to non-governmental organizations intending to strengthen civil society.
Amendments to License Exception Consumer Communications Devices made technical changes but, most significantly, now allow the commercial sale of certain communications devices to Cuba. The latest announcement also included technical revisions to License Exception Gift Parcels and Humanitarian Donations and a new general policy of approval for exports of items for environmental protection efforts in the United States and abroad.
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This alert does not constitute legal advice and anyone seeking to travel to Cuba or do business there should consult legal counsel before doing so. Persons taking advantage of the liberalized travel and trade regulations can still be subject to an array of specific rules, including reporting obligations, record-keeping requirements, and detailed restrictions on activities outside the scope of a general or specific license.
If you would like additional information about the issues addressed in this Client Alert, please contact Rich Matheny, who chairs Goodwin Procter’s National Security & Foreign Trade Regulation Practice, or the Goodwin Procter attorney with whom you typically consult.