United States: United States Eases Cuban Embargo

Last Updated: January 17 2015
Article by Ronald I. Meltzer

Today, the Obama Administration published regulatory changes, effective immediately, that will significantly ease the US embargo against Cuba, which has been in place since 1963. These changes give effect to the Obama Administration's new policy towards Cuba that was announced on December 17, 2014 to normalize US-Cuba relations. 
 
The changes will create economic opportunities in Cuba for a wide range of industries, including travel and carrier services, insurance, telecommunications and consumer communications, financial services, agriculture, media, construction, shipping, and many others. For potential business opportunities not covered by the new general authorizations, licensing agencies will likely review more favorably specific license applications.  
 
However, changes to the US trade embargo against Cuba remain incremental, and key elements of the embargo remain in place. Although the Executive Branch has discretion to alter certain aspects of the embargo, various statutes enacted over the past decades (such as the Cuban Liberty and Democratic Solidarity Act (LIBERTAD or the Helms-Burton Act)) have codified the basic architecture of the US sanctions regime, and several members of Congress have questioned the President's authority to implement the new changes. We expect legislative activity in the near future that will attempt to limit and clarify Executive Branch authority relating to Cuba sanctions and Cuba policy more broadly.  
 
The US Department of the Treasury's Office of Foreign Assets Control (OFAC) has already published Frequently Asked Questions (FAQs) regarding its new regulations, but many questions about the operation of today's changes remain.1 Over the next weeks and months, firms with potential business in Cuba should closely monitor further changes to the Cuba sanctions regulations and clarifying guidance, as well as congressional action to limit such changes. 
 
Sectors Affected by the Regulatory Changes 
 
This initial easing of the US embargo has been accomplished through the issuance of general licenses, the expansion of certain license exceptions, and other clarifications in the Cuban Assets Control Regulations,2 administered by OFAC, and the Export Administration Regulations,3 administered by the US Department of Commerce's Bureau of Industry and Security (BIS). 
 
The changes to the Cuban embargo include the following categories:4  
 
Travel to Cuba  
 
The changes significantly ease regulatory impediments to Cuba travel: 

  • New general licenses have been issued for travel falling into 12 categories previously authorized by specific license, including: journalistic activity; professional research and professional meetings; educational activities; religious activities; activities of private foundations or research or educational institutes; and exportation, importation, or transmission of information or information materials. 
  • The limit on expenditures during travel to Cuba has been lifted, and authorized travelers will be allowed to engage in transactions incident to travel within Cuba.
  • Authorized travelers will be allowed to use US credit and debit cards in Cuba.5 
  • Authorized travelers may make arrangements through any service provider that complies with OFAC regulations governing travel services to Cuba.

The authorization does not cover travel to Cuba for tourist activities.6 
 
Financial Services 
 
OFAC regulations now permit US depository institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, but Cuban banks are not permitted to open such accounts in the United States.7 Moreover, US financial institutions may enroll merchants and process credit and debit card transactions for travel-related and other transactions in Cuba. US financial institutions may also unblock the accounts of Cuban nationals (except government officials or Communist party members) who have taken up permanent residence outside Cuba and do not intend to return to Cuba. Such institutions may rely on a variety of evidence that the Cuban national qualifies for such unblocking, including government-issued identification or sworn statements.8 
 
Telecommunications and Consumer Communications  
 
The changes significantly expand opportunities for communications with and within Cuba:  

  • An OFAC general license now facilitates the establishment of commercial telecommunications facilities (including fiber-optic cable and satellite facilities) linking the United States, third countries, and Cuba and within Cuba. 
  • A new BIS license exception now permits the commercial export of certain items that will contribute to the ability of the Cuban people to communicate within Cuba and around the world. This includes the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.
  • An OFAC general license now authorizes additional services incident to Internet-based communications and related to exports of communications items.
  • A separate, revised BIS license exception, "Consumer Communications Devices" (CCD), expands the existing authorization for exports to Cuba of certain consumer computers, disk drives, monitors, printers, modems, network access equipment, mobile phones, and certain other commodities and software.9  

Other Opportunities for US Exports 
 
BIS has also created a new license exception, "Support for the Cuban People" (SCP), that authorizes exports in three areas: improving living conditions and supporting independent economic activity; strengthening civil society; and improving communications:

  • To improve living conditions and support independent economic activity, SCP authorizes exports of building materials, equipment, tools and other supplies for use in certain private sector construction and renovation activities. SCP also authorizes exports of tools, equipment, supplies, and instruments for use by private sector entrepreneurs, and exports of tools and equipment for private sector agricultural activity.
  • To strengthen civil society, SCP authorizes exports of donated items and temporary export by travelers to Cuba of items for use in scientific, archaeological, cultural, ecological, educational, historic preservation, or sporting activities, as well as exports to human rights organizations, individuals, or non-governmental organizations that promote independent activity intended to strengthen civil society. Travelers are also able to export temporarily items for use in professional research in the traveler's profession or full-time field of study. 
  • To improve communications, SCP authorizes exports of items for telecommunications, including Internet access, use of Internet services, and the creation and upgrading of telecommunication infrastructure. SCP also provides new authorizations for exports to Cuba of items used by the news media.10 

OFAC regulations also reinterpret "cash in advance" from "cash before shipment" to "cash before transfer of title to, and control of," which will allow authorized exports to receive expanded financing.  
  
Insurance 
 
US insurers are now authorized to provide coverage for global health, life or travel insurance policies for individuals residing in a third country who travel to or within Cuba. Furthermore, health, life and travel insurance-related services will continue to be permitted for authorized US travelers to Cuba. 
  
Importation of Cuban Goods 
 
Authorized US travelers may import up to $400 worth of goods acquired in Cuba for personal use, including no more than $100 of alcohol or tobacco products. 
 
Remittances  
 
Remittance levels have also been substantially raised:

  • General remittances have been raised from $500 to $2,000 per quarter (except to certain officials of the government or the Communist party) and other types of remittances will no longer require specific licensing. 
  • Certain other remittances for humanitarian projects and development of private businesses and farms are permitted without limitation.  
  • Authorized travelers are now allowed to carry $10,000 in total family remittances, periodic remittances, and remittances to religious organizations in Cuba.  
  • OFAC has also issued a general license for banking institutions (including US-registered brokers or dealers) in securities and US-registered money transmitters to process authorized remittances to Cuba. 

Third-Country Services to Cubans 
 
US-owned or US-controlled entities in third countries (including banks) that are currently prohibited from dealing with Cuban individuals are now generally licensed to do so (but this license does not cover any export of goods or services to Cuba itself). In addition, new general licenses unblock the accounts at US banks of Cuban nationals who have relocated outside of Cuba; permit US persons to participate in third-country professional meetings and conferences related to Cuba; and allow foreign vessels to enter the United States after engaging in certain humanitarian trade with Cuba. 
 
Small Business Growth  
  
OFAC regulations now authorize certain micro-financing projects and entrepreneurial and business training in Cuba, such as for private business and agricultural operations. Moreover, commercial imports of certain independent Cuban entrepreneur-produced goods and services (as determined by the State Department at a future date) are authorized. 
 
Supporting Diplomatic Relations and Official Business  
 
An OFAC general license has been issued to authorize transactions with Cuban official missions and their employees in the United States, as well as transactions with Cuba by employees, grantees, and contractors of the US government, foreign governments, and certain international organizations in their official capacities. 
 
Review of Cuba's Designation as a State Sponsor of Terrorism  
 
The President has also instructed the Secretary of State to review Cuba's designation as a state sponsor of terrorism, which has been in place since 1982. The removal of this designation would result in the easing of a variety of additional sanctions and export restrictions against Cuba.

1See US Department of the Treasury, Frequently Asked Questions Related to Cuba, Jan. 15, 2015, accessed at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf.  
 
2 31 C.F.R. Part 515. 
 
3 15 C.F.R. Parts 730-774. 
 
4 US Department of the Treasury, Fact Sheet: Treasury and Commerce Announce Regulatory Amendments to the Cuba Sanctions, Jan. 15, 2015, accessed at http://www.treasury.gov/press-center/press-releases/Pages/jl9740.aspx
 
5 However, the regulations do not require financial institutions or credit card companies to accept or facilitate such authorized transactions. 
 
6 See OFAC FAQ #7. 
 
7 See OFAC FAQ #33. 
 
8 See 31 C.F.R. § 515.505. 
 
9 Previously, CCD required that items be donated to Cuba; the newly expanded CCD removes the donation requirement and expands the list of eligible items. 
 
10 The authorizations generally cover only EAR99 items (low-technology consumer goods) and those items listed on the Commerce Control List controlled only for anti-terrorism purposes. They do not authorize the export of items on the Commerce Control List for sensitive reasons such as national security, nuclear proliferation, regional stability, missile technology, and other reasons of similar sensitivity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions