On January 15, 2015, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce, Bureau of Industry and Security (BIS) released regulatory amendments implementing the Cuba policy shift announced by President Obama in December 2014 (See prior alert here). These changes to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) take effect on January 16, 2015.
While the Cuba embargo remains in place, the changes aim to further engage and empower the Cuban people by facilitating authorized travel to Cuba, authorizing certain commerce, allowing increased remittances and improving the flow of information to and from Cuba. In doing so, these new rules open opportunities in Cuba for companies and individuals in the United States and elsewhere.
Below we focus on certain changes related to travel to, and commerce with, Cuba.
Travel to Cuba
OFAC issued general licenses for 12 existing categories of travel, and travel-related transactions, to, from or within Cuba that previously required a specific license (i.e., an application and a case-by-case determination). The categories are:
For each of these categories, it is necessary to meet the criteria set forth in the regulations in order to qualify for the general license. Travel to Cuba for tourist activities, or any other activity not covered in the categories above, is still prohibited, consistent with the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA).
In addition, the amendments facilitate travel by:
Travel and Carrier Services
Under the revised CACR, persons subject to U.S. jurisdiction can provide travel services and carrier services by aircraft, in connection with authorized travel, without the need for a specific license from OFAC. The new OFAC regulations allow scheduled operations by U.S. airlines, but this change can only take place after other regulatory approvals are obtained, such as approvals from the U.S. departments of Transportation and Homeland Security.
Commerce with Cuba and Cuban Nationals
OFAC and BIS are also amending the regulations to allow a number of other commercial activities, including those related to financial transactions, telecommunications, support for the Cuban people and other trade-related activities.
The revised regulations will allow financial institutions to provide certain services that were previously prohibited. These rules authorize depository institutions to open correspondent accounts at Cuban financial institutions and allow U.S. financial institutions to enroll merchants and process credit and debit card payments for authorized transactions. In addition, Cuban nationals living or located outside Cuba will also be permitted greater access to the U.S. financial system (e.g., the accounts of Cuban nationals who have permanently relocated outside of Cuba will be unblocked provided that certain conditions are met).
To improve the free flow of information to, from and among the Cuban people, OFAC and BIS are making a number of changes related to telecommunications, including:
Other Measures to Support the Cuban People
These new rules also include various other provisions intended to support the Cuban people:
Lastly, it is important to note that OFAC modified two long-standing rules impacting trade with Cuba:
Consistent with the above, these changes present new opportunities for a variety of companies and organizations across many industries. Since the embargo is still in place, however, taking advantage of these opportunities will generally require a deep understanding of the applicable rules to ensure that no violations of U.S. sanctions occur. Consequently, companies are at risk of civil and criminal liability in entering the Cuban market unless they take a cautious approach with the appropriate compliance measures in place.