Cuba: Retrenchment On Cuban Sanctions; The Search For A Middle Ground

The Trump Administration has made good on its promise to cut back on the liberalized Cuban policy implemented by the Obama Administration with a new regime that introduces new travel restrictions as well as broad prohibitions on "direct financial transactions" between persons subject to the jurisdiction of the United States and parties on a new Cuban Restricted List (CRL) that has been published by the State Department.

The New Cuba Restricted List

The new regulations add a new section 515.209 to the Cuban Assets Control Regulations (CACR) prohibiting "direct financial transactions" with parties on the new CRL, which names approximately 180 Cuban entities including 80 hotels all across the island. New section 515.209 is unusual in that it expressly prohibits only "direct" financial transactions, which are further specified as limited to situations where the person on the CRL is either the ultimate beneficiary or originator on a wire, credit card charge, check or payment of cash. This seems clearly to permit indirect transactions, i.e., payments to third parties in Canada, Mexico or Europe that one is aware will later be followed by a separate wire, charge, check or cash payment by that party to a CRL party. Section 515.201(c), however, remains in the CACR and continues to prohibit actions that have the purpose or effect of evading or avoiding the basic prohibitions on dealing with Cuba in 515.210(a) and (b). It remains to be seen, therefore, whether OFAC will view "indirect" transactions with CRL entities as permitted by the expressly limited wording of 515.209 or prohibited by the longstanding evasion and avoidance provision in 515.201(c).

Effect of the CRL on General Licenses

The new regulations also add a new section 515.421 providing that "transactions ordinarily incident to" transactions authorized by general or specific license do not include transactions with those on the CRL if the general or specific license expressly excludes such direct financial transactions. Such an express exclusion has been added to 18 of the General Licenses in subpart 500 of the CACR, which means that whenever a CRL person could be involved it will be necessary to sort through the General Licenses to see whether one is available that does not have the CRL exclusion. This will have an impact on many sectors. It applies, for example, to powers of attorney (515.530), negotiation of contracts (515.534), informational materials (515.545), family visits (515.561), professional meetings and research (515.564), educational and people-to-people travel (515.565), religious activities (515.566), public performances (515.567), activities of private foundations (515.576), imports from Cuba of internet services and software (515.578), and third country conferences (515.581). It also affects financial transactions (515.584) with the exception of transactions for medicine, exports of telecom or internet services for the Cuban people, or the air and sea transport for permissible travel. The CRL exclusion does not apply to several of the General Licenses, for example telecom transactions (515.542), authorized exports (515.559), humanitarian projects (515.575) and insurance (515.580).

Personal Travel

The personal travel rules are changed so that educational travel fitting the rules as of January 27, 2011 is still permitted, but travel not authorized as of that date that became permissible under the Obama Administration's later rules must now take place with an accompanying person subject to U.S. jurisdiction who is employed by or represents the sponsoring organization, and when there is no tour group, the accompanying representative must have a letter establishing his role on behalf of the sponsoring organization. There is grandfathering of previously arranged travel. There are also additional criteria for people-to-people travel and travel to support the Cuban people. Cuban policy has been to require new hotels to be under Cuban government ownership. As a result, direct booking of travel to Cuba by U.S. travelers is effectively being limited to private accommodations or other lodging one can find that is not owned by a CRL entity. Cruises may gain a notable advantage as a means of visiting Cuba compared to airplane flights since they avoid the hotel problem.

Business Travel

As noted above, the provisions of 515.542 or 515.559, which allow sale of telecom services and specified exports, respectively, are not subject to the CRL exclusion. U.S. persons who market or negotiate such transactions often rely upon 515.534 (contract negotiation) or 515.564 (professional meetings) to travel to Cuba, and those general licenses are now subject to the CRL exclusion. This will pose a significant challenge to U.S. companies seeking to market in Cuba. It is interesting that 515.559 has been left free of the CRL prohibition. It appears that the cross-reference to 515.560(c) in 515.559 is not sufficient by itself to subject the travel authorization in 515.559(d) to the CRL restriction. Travel that fits the specific requirements of section 515.559 (certain types of medical and telecom items) apparently could include CRL hotels.

Financial Transfers to CRLs

The new FAQs published simultaneously by OFAC include this interesting question and answer:

67. Is the U.S. originating bank or U.S. beneficiary bank required to independently verify that a person subject to U.S. jurisdiction is not engaging in a direct financial transaction as defined in § 515.209 when processing Cuba-related transactions?

No. To the extent the transaction involves an entity or subentity on the Cuba Restricted List, a financial institution can rely on the statements of its customer that the transaction is authorized unless it knows or has reason to know the transaction is not authorized. A financial institution is expected to do its normal due diligence with respect to a transaction involving Cuba or a Cuban national.

This FAQ confirms that various CRL transactions (among them, export sales to CRL parties authorized by 515.559) continue to be authorized, and the FAQ goes further by telling banks that they can rely on a customer's statement that its export transaction is authorized when "normal due diligence" has disclosed no information to the contrary.

Prohibited Officials of Cuba

The Administration's new regulations also expands the list of "prohibited officials of the Government of Cuba." That list now has essentially the same scope it had prior to October 17, 2016.

Commerce Department Amendments

The Commerce Department also published new rules and FAQs to implement the new Cuba policy. Commerce has added the CRL parties to its general policy of denial in EAR section 726.2. It also has confirmed that the license exceptions for gift parcels (GFT), consumer communications devices (CCD) and support for the Cuban people (SCP) are not available for persons on the newly expanded list of prohibited officials of the Government of Cuba. Finally, Commerce has simplified and broadened the scope of what can be exported under SCP provided it is for the private sector in Cuba, excluding parties on the CRL. No changes have been made to the list of items authorized for export in paragraph (b) of the CCD exception, and no changes have been made in paragraph (d)(1) of the SCP exception, which allows telecommunications and Internet equipment and related infrastructure equipment to be exported to Cuba, including to entities controlled by the Cuban Government. Entities on the CRL that previously qualified for such exports continue to qualify.

The Trump Administration's action does indeed find a middle ground between the position of the Obama Administration and the strict embargo that pre-dated the Obama Administration's opening to Cuba. Quite a bit of U.S. trade will be able to continue, and tourism, especially by cruise ships, will continue, albeit with some new limitations. That said, the number of hotels on the CRL is sure to have a significant impact on the volume and American travel that is not by cruise. The new and unusual prohibition of only "direct financial transactions" is also sure to raise interesting compliance questions for banks and companies dealing with the new rules.

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

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

Events from this Firm
14 Dec 2017, Other, New York, United States

We are experiencing a retail apocalypse and proactive compliance can be the difference between success and failure.

19 Dec 2017, Webinar, Los Angeles, United States

In Part 3 of the series, Jonathan Meyer and Townsend Bourne will delve into cybersecurity regulations and standards applicable to government contractors.

21 Dec 2017, Webinar, Los Angeles, United States

Stay tuned on the latest developments in Europe that may affect your business and join Sheppard Mullin’s Antitrust & Competition “Breakfast with Europe” drive-time webinars, bringing you up to speed on what you need to know about the month back, the present and month forward in European competition law developments.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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