On September 6, 2019, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced amendments to the Cuban Assets Control Regulations (CACR) to further implement President Donald Trump’s 2017 National Security Presidential Memorandum on Cuba. These amendments: (1) impose new caps and restrictions on sending family and “donative” remittances to Cuba; (2) authorize sending remittances to certain “self-employed individuals”; and (3) remove a general license that had allowed financial institutions subject to US jurisdiction to engage in certain “U-turn” transactions. Accordingly, these new measures tighten the longstanding US embargo on Cuba by rolling back several provisions of the sanctions relief authorized by President Barack Obama, while nevertheless creating a new channel for certain remittances.
The US embargo on Cuba generally prohibits persons subject to US jurisdiction from engaging in financial transactions with Cuba or Cuban nationals, including sending funds to them. There are longstanding authorizations/exceptions, however, which permit certain types of remittances, including the sending of money to family members and certain individuals and independent non-governmental organizations in Cuba. Successive US administrations, in connection with efforts to expand or narrow the Cuba sanctions, have changed the scope of what remittances are permitted.
Accordingly, effective October 9, 2019, OFAC will narrow the scope of previous authorizations in three ways. First, OFAC will set a cap of $1,000 per quarter on the amount that persons subject to US jurisdiction can send to a Cuban national as a family remittance. Second, the new regulations will prohibit all remittances of any kind to close family members of Cuban government officials or the Cuban Communist Party. Finally, the new regulations prohibit all “donative” remittances (i.e., remittances to friends and organizations) to Cuba.
While removing these prior authorizations, OFAC has, however, also established a new authorization for certain types of remittances. Under the new authorization, persons subject to US jurisdiction can provide remittances to certain individuals and independent non-governmental organizations that meet the definition of what OFAC calls “self-employed individuals.”
The amendment defines a “self-employed individual” as:
(a) an owner or employee of a small private business or a sole proprietorship, including restaurants (paladares), taxis and bed-and-breakfasts (casas particulares);
(b) an independent contractor or consultant;
(c) a small farmer who owns his or her own land; or
(d) a small usufruct farmer who cultivates state-owned land to sell products on the open market.
This new authorization aims “to support the operation of economic activity in [Cuba’s] non-state sector by self-employed individuals, in light of [President Trump’s] policy to encourage the growth of the Cuban private sector independent of government control.”
Also effective October 9, 2019, OFAC will remove its prior authorization for certain “U-turn” transactions. These are funds transfers that are processed by banks subject to US jurisdiction but which originate and terminate outside the US. Under Obama-era sanctions relief, such U-turns were permitted, so long as neither the originator nor the beneficiary were subject to US jurisdiction (and met certain other terms and conditions). Under OFAC’s new amendment, financial institutions that are subject to US jurisdiction will be required to reject such transactions going forward. This new prohibition (which, technically, is the removal of a prior element of sanctions relief) will not require subject financial institutions to freeze (block) the assets involved, absent some other sanctionable activity (e.g., the involvement of a sanctioned person that is blocked under another, non-Cuba US sanctions authority).
The September 6, 2019, amendments supplement several rounds of intensification of US sanctions on Cuba, in line with President Trump’s 2017 National Security Presidential Memorandum. This process has involved repealing or significantly curtailing much of the sanctions relief provided under the Obama administration, along with activating for the first time the ability of US nationals to file lawsuits in federal court against any individual or entity that “traffics” in property confiscated by the Cuban government on or after January 1, 1959—a time span of more than 60 years.
The September 6, 2019, amendments also occur amid a heightened focus on Cuba by the Trump administration, in particular because of concerns about Cuba’s role in the ongoing situation in Venezuela. Accordingly, it remains to be seen whether, and if so how, the US might further expand its already wide‑ranging embargo or intensify enforcement.
- “Publication of Updated Cuban Assets Control Regulations (CACR) and Frequently Asked Questions” (Sept. 6, 2019).↩
- Persons subject to US jurisdiction include any individual, wherever located, who is a citizen or resident of the US; any person who is actually within the US; any corporation, partnership, association, or other organization organized under the laws of the US or of any state, territory, possession or district of the United States; and any corporation, partnership, association, or other organization, wherever organized or doing business, that is owned or controlled by persons described above. 31 C.F.R. § 515.329.↩
- Department of Treasury Office of Foreign Assets Control, Cuban Assets Control Regulations, 84 Fed. Reg. 47,121, 47,122 (Sept. 9, 2019) (to be codified at 31 C.F.R. pt. 515).↩
- See “US courts open to lawsuits for “trafficking” in confiscated Cuba property” (Apr. 25, 2019). ↩