On June 16, 2017 President Trump announced new policy parameters for the U.S.-Cuba relationship and directed the Office of Foreign Assets Control (OFAC), Department of Treasury, Bureau of Industry and Security (BIS), Department of Commerce, and the State Department to take actions to restrict certain transactions and travel authorizations related to Cuba. This represents a reversal from the Obama Administration’s policy of increasing opportunities for U.S. persons to transact with and travel to Cuba. Importantly, the announced changes will not take effect until new regulations are issued.

The new policy is designed to achieve four objectives: (i) enhance compliance with United States law, in particular, with respect to the provisions that govern the embargo of Cuba and the ban on tourism; (ii) hold the Cuban regime accountable for oppression and human rights abuses; (iii) further the national security and foreign policy interests of the United States and those of the Cuban people; and (iv) lay the groundwork for empowering the Cuban people to develop greater economic and political liberty.

In addition to other items, the President has directed certain key changes including:

• a prohibition on all transactions with the Cuban military, intelligence, or security services personnel (such as Grupo de Administracion Empresarial S.A. (GAESA), its affiliates, subsidiaries, and successors). All relevant will be identified by the State Department; and
• a prohibition on “individual people-to-people” travel to Cuba.

Prohibited Transactions with Cuban Military/Government

The State Department will identify all entities under the control of, or acting for or on behalf of, the Cuban military. Subject to certain exceptions, most direct financial transactions with these entities will be prohibited. As noted above, the White House has already identified the GAESA as one such entity. GAESA is heavily involved in the Cuban economy and owns a wide variety of entities related to trade and tourism. Thus, the State Department’s prohibited entities list could include entities that do not outwardly appear to have any connection to the Cuban military.

Prohibited Individual People-to-People Travel

President Trump also announced the Administration’s intention to significantly restrict “individual people-to-people travel,” which permitted U.S. persons to travel to Cuba to enhance contact with Cuban people. Once the new regulations are implemented, travel for non-academic education purposes will be limited to directed group travel where members of the sponsoring organization must accompany the U.S. traveler. Travel for academic purposes will only be permitted under the auspices of an academic organization subject to the jurisdiction of the United States. While other travel authorizations will remain in place, these changes could impact the number of U.S. travelers to Cuba.

Key Takeaways

This announcement does not appear to completely reverse the changes made during the Obama Administration; however, it is a clear indication that President Trump will not approach U.S.-Cuba relations in the same way that President Obama did. The full impact of this policy shift will be determined by the specific regulations drafted and implemented by OFAC, BIS, and the State Department. President Trump has directed applicable federal agencies to begin the rule-making process within 30 days, however, implementation of such rules could take several months.

Please refer to this space for continued updates.