U.S. Commerce and Treasury Department measures intended to further ease existing export and sanctions restrictions regarding Cuba took effect on September 21, 2015. These amendments to the Cuban Assets Control Regulations (CACR) and Cuba-related sections of the Export Administration Regulations (EAR) add to the significant changes announced by the U.S. Government in December 2014 and January 2015 in recognition of the continued improvement of U.S.-Cuba relations (as covered in our previous OnPoint).
Summary of New Changes to U.S. Sanctions and Export Controls Regarding Cuba
Treasury and Commerce officials announced that the additional changes are intended to make possible more private sector business opportunities for U.S. companies in Cuba. The changes ease restrictions applicable to U.S. persons (and their non-U.S. subsidiaries) in a wide range of areas, including:
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Travel to Cuba: While U.S. persons remain prohibited from traveling to Cuba for tourism purposes, they have been permitted to travel to Cuba for any of twelve authorized purposes (including for educational, journalistic or professional research purposes, among others) pursuant to previously-implemented changes to U.S. sanctions laws. Under the new rules, family members of most authorized travelers are permitted to travel to Cuba as well. U.S. cruise ships and passenger ferries also now are permitted to travel between the United States and Cuba – and provide lodging services during such trips – as long as any persons or cargo being transported are authorized under U.S. law (such as through license exceptions or general or specific licenses under the EAR and CACR). All authorized travelers will be permitted to open, maintain and close bank accounts in Cuba.
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Telecommunications & Internet-Based Services: U.S. persons now are permitted to establish joint ventures and enter into other business relationships with Cuban entities (including Cuban government entities) to provide certain types of telecommunications and internet-based services in Cuba. Existing authorizations related to the export of products and services related to telecommunications also have been expanded.
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Establishment of Physical Presence: Certain categories of U.S. persons – including news bureaus, telecommunications services providers, and other entities exporting goods or services to Cuba that are authorized under the EAR or CACR (such as agricultural products or travel/carrier service providers) – are authorized to establish and maintain offices, warehouses or other physical presences in Cuba. Such persons also will be authorized to employ Cuban or U.S. nationals at these Cuban locations, as well as to open, maintain and close bank accounts in Cuba.
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Payments for Authorized Activities: U.S. persons engaging in authorized activities in Cuba – including with respect to authorized travelers to Cuba, establishing physical presences in Cuba and engaging in authorized telecommunications and internet-based services to Cuba, among others – also are authorized to engage in funds transfers and payments ordinarily incident to such activities, as long as such transactions do not involve prohibited Cuban Government or Communist party officials. This includes opening, maintaining and closing bank accounts in Cuba – and depositing and transmitting funds via wire transfers to Cuba – for such activities. U.S. financial institutions are authorized to engage in financial transactions incident to authorized activities, including processing U.S.-dollar denominated transactions and other payments made via online payment platforms for authorized purposes.
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Expansion of License Exceptions: Additional items now are authorized for export under license exceptions created in January 2015 that permit the export of certain items to Cuba, including: items to be given away for free as gifts for promotional purposes (including pens, hats, t-shirts, etc.); items for use in establishing and maintaining a physical presence in Cuba by authorized U.S. persons; and items for use in the development of software to improve the free flow of information in Cuba or support certain private sector activities.
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Transactions Involving Cuban Nationals Outside of Cuba: U.S. persons are authorized to engage in commercial and financial transactions with, and provide goods and services to, Cuban nationals located outside of Cuba (as long as there are no underlying unauthorized transfers to Cuba). U.S. financial institutions also are permitted to open, maintain and close accounts for Cuban nationals who reside in Cuba, as long as such accounts are used only while the individual is located outside of Cuba.
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Additional Educational Activities: U.S. persons are permitted to engage in a broader range of educational activities in Cuba, including providing standardized testing services and internet-based courses and conducting academic exchanges or joint non-commercial academic research with Cuban academic institutions.
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New Licensing Policy for Civil Aviation Safety: A case-by-case review policy (rather than a policy of denial) will apply to applications for the export of items to Cuba to help ensure the safety of civil aviation and safe operation of commercial aircraft, including with respect to aircraft parts and components, flight safety software and technology and related items.
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Payment for Legal Services: U.S. persons are permitted to receive payment for certain authorized legal services – including services regarding compliance with U.S. laws and representation before U.S. courts – provided to most Cuban nationals (other than payments from Cuban Government or Communist Party officials).
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Increased Remittances: Monetary limits on remittances that can be provided by U.S. persons to most Cuban nationals have been removed, and financial institutions are authorized to provide services in support of such remittances.
While many of these changes represent a significant easing of restrictions involving Cuba, many practical considerations still apply to transactions with Cuba. Moreover, congressional action would be required to fully lift the U.S. embargo of Cuba, and this is not anticipated in the near future. We also note that depending on the result of U.S. presidential elections next year, many of these eased restrictions may be reimposed through executive action.
Dechert will continue to provide up to date information on the sanctions.
