Archive for the ‘Cuba’ Category

Treasury/OFAC Publishes New Cuba-Related FAQs

Wednesday, July 19th, 2017 by Danielle McClellan

(Source: Treasury/OFAC)

Frequently Asked Questions on President Trump’s Cuba Announcement

 

(1) How will OFAC implement the changes to the Cuba sanctions program announced by the President on June 16, 2017?  Are the changes effective immediately?

OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations.  The Department of Commerce will implement any necessary changes via amendments to its Export Administration Regulations.  OFAC expects to issue its regulatory amendments in the coming months.  The announced changes do not take effect until the new regulations are issued.

 

(2) What is individual people-to-people travel, and how does the President’s announcement impact this travel authorization?

Individual people-to-people travel is educational travel that: (i) does not involve academic study pursuant to a degree program; and (ii) does not take place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact.  The President instructed Treasury to issue regulations that will end individual people-to-people travel.  The announced changes do not take effect until the new regulations are issued.

 

(3) Will group people-to-people travel still be authorized?

Yes.  Group people-to-people travel is educational travel not involving academic study pursuant to a degree program that takes place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact.  Travelers utilizing this travel authorization must maintain a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba.  An employee, consultant, or agent of the group must accompany each group to ensure that each traveler maintains a full-time schedule of educational exchange activities.

 

(4) How do the changes announced by the President on June 16, 2017 affect individual people-to-people travelers who have already begun making their travel arrangements (such as purchasing flights, hotels, or rental cars)?

The announced changes do not take effect until OFAC issues new regulations.  Provided that the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President’s announcement on June 16, 2017, all additional travel-related transactions for that trip, whether the trip occurs before or after OFAC’s new regulations are issued, would also be authorized, provided the travel-related transactions are consistent with OFAC’s regulations as of June 16, 2017.

Department of the Treasury Office of Foreign Assets Control (OFAC)

 

(5) How do the changes announced by the President on June 16, 2017 affect other authorized travelers to Cuba whose travel arrangements may include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy?

The announced changes do not take effect until OFAC issues new regulations.  Consistent with the Administration’s interest in not negatively impacting Americans for arranging lawful travel to Cuba, any travel-related arrangements that include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those travel arrangements were initiated prior to the issuance of the forthcoming regulations.

 

(6) How do the changes announced by the President on June 16, 2017 affect companies subject to U.S. jurisdiction that are already engaged in the Cuban market and that may undertake direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy?

The announced changes do not take effect until OFAC issues new regulations.  Consistent with the Administration’s interest in not negatively impacting American businesses for engaging in lawful commercial opportunities, any Cuba-related commercial engagement that includes direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those commercial engagements were in place prior to the issuance of the forthcoming regulations.

 

(7) Does the new policy affect how persons subject to U.S jurisdiction may purchase airline tickets for authorized travel to Cuba?

No. The new policy will not change how persons subject to U.S. jurisdiction traveling to Cuba pursuant to the 12 categories of authorized travel may purchase their airline tickets.

 

(8) Can I continue to send authorized remittances to Cuba?

Yes.  The announced policy changes will not change the authorizations for sending remittances to Cuba.  Additionally, the announced changes include an exception that will allow for transactions incidental to the sending, processing, and receipt of authorized remittances to the extent they would otherwise be restricted by the new policy limiting transactions with certain identified Cuban military, intelligence, or security services.  As a result, the restrictions on certain transactions in the new Cuba policy will not limit the ability to send or receive authorized remittances.

 

(9) How does the new policy impact other authorized travel to Cuba by persons subject to U.S. jurisdiction?

The new policy will not result in changes to the other (non-individual people-to-people) authorizations for travel.  Following the issuance of OFAC’s regulatory changes, travel-related transactions with prohibited entities identified by the State Department generally will not be permitted. Guidance will accompany the issuance of the new regulations.

 

(10) How will the new policy impact existing OFAC specific licenses?

The forthcoming regulations will be prospective and thus will not affect existing contracts and licenses.

 

(11) How will U.S. companies know if their Cuban counterpart is affiliated with a prohibited entity or sub-entity in Cuba?

The State Department will be publishing a list of entities with which direct transactions generally will not be permitted.  Guidance will accompany the issuance of the new regulations.  The announced changes do not take effect until the new regulations are issued.

 

(12) Is authorized travel by cruise ship or passenger vessel to Cuba impacted by the new Cuba policy?

Persons subject to U.S. jurisdiction will still be able to engage in authorized travel to Cuba by cruise ship or passenger vessel.

Following the issuance of OFAC’s regulatory changes, travel-related transactions with prohibited entities identified by the State Department generally will not be permitted.  Guidance will accompany the issuance of the new regulations.

For more information on the National Security Presidential Memorandum visit: https://www.whitehouse.gov/blog/2017/06/16/fact-sheet-cuba-policy.

Trump Calls for Slight Rollback on Obama’s Slight Relaxations for Cuba

Wednesday, July 19th, 2017 by Danielle McClellan

(Source: Reuters, 16 June 2017.)

President Donald Trump on Friday ordered tighter restrictions on Americans traveling to Cuba and a clampdown on U.S. business dealings with the island’s military, saying “with God’s help a free Cuba is what we will soon achieve.”

As Trump laid out his new Cuba policy in a speech in Miami, the White House announced plans to roll back parts of former President Barack Obama’s historic opening to the communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes. But Trump was leaving many of Obama’s changes, including the reopened U.S. embassy in Havana, in place even as he sought to show he was making good on a campaign promise to take a tougher line against Cuba. “We will not be silent in the face of communist oppression any longer,” Trump told a cheering crowd in Miami’s Cuban-American enclave of Little Havana, including Republican Senator Marco Rubio, who helped forge the new restrictions on Cuba.

Trump’s revised approach, which will be enshrined in a new presidential directive, calls for stricter enforcement of a longtime ban on Americans going to Cuba as tourists and seeks to prevent U.S. dollars from being used to fund what the new U.S. administration sees as a repressive military-dominated government.

But facing pressure from U.S. businesses and even some fellow Republicans to avoid turning back the clock completely in relations with communist-ruled Cuba, the Republican president chose to leave intact many of his Democratic predecessor’s steps toward normalization. The new policy bans most U.S. business transactions with the Armed Forces Business Enterprises Group, a Cuban conglomerate involved in all sectors of the economy, but makes some exceptions, including for air and sea travel, according to U.S. officials. This will essentially shield U.S. airlines and cruise lines serving the island. However, Trump will stop short of breaking diplomatic relations restored in 2015 after more than five decades of hostilities. He will not cut off recently resumed direct U.S.-Cuba commercial flights or cruise-ship travel, though his more restrictive policy seems certain to dampen new economic ties overall.

The administration, according to one White House official, has no intention of “disrupting” existing business ventures such as one struck under Obama by Starwood Hotels Inc., which is owned by Marriott International Inc., to manage a historic Havana hotel. Nor does Trump plan to reinstate limits that Obama lifted on the amount of the island’s coveted rum and cigars that Americans can bring home for personal use. While the changes are far-reaching, they appear to be less sweeping than many U.S. pro-engagement advocates had feared. Still, it will be the latest attempt by Trump to overturn parts of Obama’s presidential legacy. He has already pulled the United States out of a major international climate treaty and is trying to scrap his predecessor’s landmark healthcare program.

The following article provides OFAC’s recent FAQs regarding President Trump’s statement about Cuba.

US Oil & Gas Company Fined $25 Million from BIS & OFAC

Tuesday, December 20th, 2016 by Danielle McClellan

National Oilwell Varco, Inc., a Delaware corporation, and its Canadian subsidiaries, Dreco Energy Services, Ltd (Dreco) and NOV Elmar (NOV) have agreed to pay a combined $25 Million for violations of the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Sudanese Sanctions Regulations.

The charges are as follows:

  • Between 2002 and 2005, National Oilwell Varco approved four Dreco commission payments to a UK based entity related to the sale and exportation of goods from Dreco to Iran. The four commission payments had a combined value of $2,630,091.
  • Between 2006 and 2008 National Oilwell Varco was involved in two transactions involving the sale and exportation of goods to Iran that totaled $13,596,980.
  • Between 2003 and 2007, Dreco knowingly exported (indirectly) goods from the US to fill seven orders from Iranian customers. The transactions totaled $526,480.
  • During 2007 and 2009, Dreco engaged in 45 transactions involving the sale of goods to Cuba totaling $1,707,964.
  • NOV engaged in two transactions between 2007 and 2008 involving the sale of goods or services to Cuba that totaled $103,119.
  • Finally, between 2005 and 2006 NOV engaged is a $20,928 transaction involving the exportation of goods from the US to Sudan.

OFAC considered the violations to be egregious since senior-level executives approved the commission payments and the NOV “willfully blinded” itself of the regulation violations by continuing to approve payments and communications. NOV will pay OFAC a settlement of $5,976,028, this will be deemed satisfied with its payment of $25,000,000 in relation to its settlement agreement between OFAC, BIS, and a Non-Prosecution Agreement (NPA).

OFAC considered the following to be aggravating factors:

  1. NOV’s conduct that gave rise to the Apparent Violations demonstrated at least reckless disregard for U.S. sanctions requirements;
  2. Senior managers at National Oilwell Varco, Inc. and Dreco knew or had reason to know that their respective business transactions giving rise to the ITSR-related apparent violations involved Iran;
  3. NOV’s conduct caused harm to sanctions program objectives by providing a significant and sustained economic benefit to the petroleum industries in Cuba, Iran, and Sudan;
  4. NOV is a large and sophisticated company that is engaged in the business of providing oilfield services around the world, including regions with high sanctions risk; and
  5. NOV’s compliance program at the time of the Apparent Violations was wholly inadequate.

OFAC considered the following to be mitigating factors:

  1. NOV had not received a Penalty Notice or Finding of Violation in the five years preceding the date of the earliest transaction giving rise to the Apparent Violations;
  2. NOV cooperated with OFAC’s investigation, including by agreeing to toll the statute of limitations for more than 2,600 days; and
  3. NOV has made efforts to remediate its compliance program and agreed to further compliance enhancements.

More Information: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20161114_varco.pdf

BIS revises License Exceptions Related to Cuba

Tuesday, November 15th, 2016 by Danielle McClellan

This rule amends a license exception to allow cargo aboard aircraft to transit Cuba when that cargo is bound for destinations other than Cuba. This rule also authorizes export and reexport of certain items sold directly to individuals in Cuba under a license exception. Finally, this rule revises the lists of ineligible Cuban officials for purposes of certain license exceptions. BIS is publishing this rule to further implement the administration’s policy of increasing engagement and commerce that benefits the Cuban people.

This final ruling is in conjunctions with OFAC (Office of Foreign Assets Controls) recent amendments to the Cuban Assets Control Regulations (CACR) (31CRF Part 515). Although the changes below revise the licensing policy for certain types of exports, the United States continues to maintain a comprehensive embargo on trade with Cuba. The export and reexport to Cuba of all items subject to the EAR still requires a BIS license, unless authorized by a license exception specified in §746.2(a)(1) of the EAR or exempted from license requirements in §746.2(a)(2) of the EAR.

The following changes will be made:

PART 740

  • Section 740.12 is amended by revising paragraphs (a)(2)(v)(A) and (B) to read as follows: § 740.12    Gift parcels and humanitarian donations (GFT).

(a) *  *  *

(2) *  *  *

(v) *  *  *

(A) No gift parcel may be sent to any member of the Council of Ministers or flag officer of the Revolutionary Armed Forces.

(B) No gift parcel may be sent to any member of the Politburo.

  • Section 740.15 is amended by revising the introductory text and paragraph (d)(6), removing the second (duplicate) ‘‘note to paragraph (d),’’ redesignating paragraph (e) as paragraph (f), and adding a new paragraph (e) to read as follows:
    • § 740.15    Aircraft, vessels and spacecraft (AVS). This License Exception authorizes departure from the United States of foreign registry civil aircraft on temporary sojourn in the United States and of U.S. civil aircraft for temporary sojourn abroad; the export of equipment and spare parts for permanent use on a vessel or aircraft; exports to vessels or planes of U.S. or Canadian registry and U.S. or Canadian Airlines’ installations or agents; the export or reexport of cargo that will transit Cuba on an aircraft or vessel on temporary sojourn; and the export of spacecraft and components for fundamental research. Generally, no License Exception symbol is necessaryfor export clearance purposes; however, when necessary, the symbol ‘‘AVS’’ may be used.
    •  (d) *  *  *
    • (6) Cuba, eligible vessels and purposes. Only the types of vessels listed in this paragraph (d)(6) departing for Cuba for the purposes listed in this paragraph (d)(6) may depart for Cuba pursuant to this paragraph (d). Vessels used to transport both passengers and items to Cuba may transport automobiles only if the export or reexport of the automobiles to Cuba has been authorized by a separate license issued by BIS (i.e., not authorized by license exception).
    • (i) Cargo vessels for hire for use in the transportation of items;
    • (ii) Passenger vessels for hire for use in the transportation of passengers and/ or items; and
    • (iii) Recreational vessels that are used in connection with travel authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC).
    • Note to paragraph (d)(6)(iii): Readers should also consult U.S. Coast Guard regulations at 33 CFR part 107 Subpart B— Unauthorized Entry into Cuban Territorial Waters.
    • (e) Intransit cargo. Cargo laden on board an aircraft or vessel may transit Cuba provided:
      • (1) The aircraft or vessel is exported or reexported on temporary sojourn to Cuba pursuant to paragraph (a) or (d) of this section or a license from BIS; and
      • (2) The cargo departs with the aircraft or vessel at the end of its temporary sojourn to Cuba, is not removed from the aircraft or vessel for use in Cuba and is not transferred to another aircraft or vessel while in Cuba.

 

  • Section 740.19 is amended by revising paragraphs (c)(2)(i) and (ii) to read as follows: § 740.19    Consumer communications devices (CCD).
    •  (c) *  *  *
    • (2) *  *  *
    • (i) Ineligible Cuban Government Officials. Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces.
    • (ii) Ineligible Cuban Communist Party Officials. Members of the Politburo.
  • Section 740.21 is amended by:
    • a. Removing the word ‘‘or’’ from the end of paragraph (b)(2);
    • b. Removing the period from the end of paragraph (b)(3) and adding in its place ‘‘; or’’;
    • c. Adding paragraph (b)(4) and;
    • d. Revising paragraphs (d)(4)(ii) and (iii).
    • The addition and revisions read as follows: § 740.21    Support for the Cuban People (SCP).
      •  (b) *  *  *
      • (4) Items sold directly to individuals in Cuba for their personal use or their immediate family’s personal use, other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section.
      • (d) *  *  *
      • (4) *  *  *
      • (ii) Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces; and
      • (iii) Members of the Politburo.
  • Section 746.2 is amended by revising paragraph (a)(1)(x) to read as follows:
    •  § 746.2    Cuba.
      • (a) *  *  *
      • (1) *  *  *
      • (x) Aircraft, vessels and spacecraft (AVS) for certain aircraft on temporary sojourn; equipment and spare parts for permanent use on a vessel or aircraft, and ship and plane stores; vessels on temporary sojourn; or cargo transiting Cuba on aircraft or vessels on temporary sojourn (see § 740.15(a), (b), (d), and (e) of the EAR).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25034.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury’s joint fact sheet, and BIS’s updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

OFAC Amends Cuban Assets Control Regulations

Tuesday, November 15th, 2016 by Danielle McClellan

Effective October 17, 2016 OFAC has made the following changes to the Cuban Assets Control Regulations.

Health: Joint medical research

  • OFAC is amending section 515.547 to authorize persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. This general license expands the scope of joint research projects that are authorized to include both non-commercial and commercial medical research. Cuban-origin pharmaceuticals.
  • OFAC is also amending section 515.547 to add new authorizations related to Cuban- origin pharmaceuticals. Specifically, section 515.547 now authorizes transactions incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban-origin pharmaceuticals. The general license includes discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals.
  • Section 515.547 also now authorizes the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals.
  • In addition, revised section 515.547 authorizes persons subject to U.S. jurisdiction who are engaging in such authorized activities to open, maintain, and close bank accounts at Cuban financial institutions as long as such accounts are used solely for the authorized activities.
  • The statement of licensing policy previously contained in section 515.547 for the importation of Cuban-origin commodities for bona-fide research purposes in sample quantities remains in effect for items that would not be authorized by the new general license in section 515.547(b).

Trade and Commerce: Transactions incident to exports and reexports to Cuba

  • Section 515.533(a) of the Regulations authorizes transactions ordinarily incident to certain exportations of items from the United States, as well as certain reexportations of items from a third country, to Cuba, provided that the exportations or reexportations are authorized by the Department of Commerce.
  • OFAC is removing references to ‘‘100% U.S.- origin items’’ in this section for clarity and to minimize the circumstances under which persons authorized by Commerce to export or reexport items to Cuba are required to obtain a specific license from OFAC.
  •  Consistent with Section 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6005) (CDA), this general license does not authorize any transaction between a U.S.-owned or -controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba. Such transactions must be specifically licensed pursuant to section 515.559 in addition to any required authorization from the Department of Commerce. There are also restrictions imposed by the CDA on the types of transactions that may be licensed pursuant to that section.
  • OFAC is also making a technical correction to section 515.533(a) to remove references to ‘‘agricultural items’’ so that only ‘‘agricultural commodities,’’ as defined in 15 CFR part 772, are subject to the limitations on payment and financing terms required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1). OFAC is making a conforming edit with respect to section 515.584(f) and also expanding that authorization to apply to any banking institution.
  • Finally, OFAC is adding a note to section 515.533(a) to clarify that this paragraph authorizes the importation into the United States of items from a third country for exportation to Cuba pursuant to a license or other authorization by the Department of Commerce.
  • OFAC is making additional technical and conforming changes to remove certain obsolete language and consolidate all of the conditions applicable to this general license in a single paragraph. Importation of certain items previously exported or reexported to Cuba and servicing and repair of such items.
  • OFAC is further amending section 515.533 to add a new general license authorizing the importation into the United States or a third country of items previously exported or reexported to Cuba pursuant to section 515.533 or 515.559. This authorization will allow recipients of authorized exports or reexports to Cuba to return the items to the United States or a third country, including for service and repair. Irrespective of involvement in the importation of these items, persons subject to U.S. jurisdiction are authorized to service and repair such items. The exportation or reexportation of serviced, repaired, or replacement items to Cuba, however, must be separately authorized pursuant to section 515.533(a) or 515.559, in addition to any Department of Commerce authorization that may be required.
  • Certain vessel transactions:
    • Section 515.207(a) prohibits foreign vessels that call on Cuban ports for trade purposes from entering U.S. ports for the purpose of loading or unloading freight for 180 days from the date they depart Cuba, absent OFAC authorization.
    • OFAC is amending section 515.550 to add an additional exception to the prohibition in section 515.207(a) for foreign vessels that have carried from a third country to Cuba only items that, were they subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), would be designated as EAR99 or would be controlled on the Commerce Control List only for anti- terrorism reasons.
  • Contingent contracts.
    •  OFAC is adding a new general license in section 515.534 authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions prohibited by the Regulations and to engage in transactions ordinarily incident to negotiating and entering into such contracts. The performance of such contracts—making deposits, receiving payments, providing certain services or goods, etc.—must be made contingent on OFAC authorizing the underlying transactions or authorization no longer being required. Furthermore, if the transaction implicates another Federal agency’s licensing requirements, then the contract must make obtaining the necessary license(s) from such agency or the removal of that licensing requirement an additional precondition of performance.
    • OFAC is making a conforming change to section 515.533 to remove a provision in that section authorizing certain contingent contracts that are now authorized by this new general license.

Civil Aviation Safety: Civil aviation safety-related services.

  • OFAC is amending section 515.572 to add a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.

Travel and Related Transactions: OFAC is making several changes to rules related to the importation of Cuban-origin merchandise as accompanied baggage and certain travel- related authorizations.

  • Importation of Cuban Merchandise
    • Section 515.560 previously authorized persons subject to U.S. jurisdiction engaging in authorized travel to Cuba to acquire merchandise in Cuba and import it into the United States as accompanied baggage, provided that the merchandise was for personal use only and had a value of $400 or less (with no more than $100 of such merchandise consisting of alcohol or tobacco products).
    • OFAC is now removing these monetary value limits, which means that the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use will apply. OFAC will continue to require that such merchandise be imported as accompanied baggage and for personal use. Certain transactions in third countries.
    • Previously, section 515.585 authorized persons who are subject to U.S. jurisdiction but located in countries other than the United States or Cuba to, among other things, purchase or acquire merchandise subject to the prohibitions in section 515.204 provided that the merchandise was for personal consumption while in a third country.
    • OFAC is amending section 515.585 to remove the limitation that the merchandise be consumed while abroad, to authorize the importation of such merchandise into the United States as accompanied baggage provided that the merchandise is for personal use only, and to clarify that this authorization is applicable to persons subject to U.S. jurisdiction who are present in a third country, such as when traveling in or through the third country. Foreign passengers’ baggage.
    • Previously, section 515.569 authorized foreign passengers to import Cuban- origin goods, excluding Cuban-origin alcohol and tobacco products, as accompanied baggage, provided that the goods were not in commercial quantities and not imported for resale.
  • OFAC is now removing the exclusion for alcohol and tobacco products while retaining the conditions that the goods not be in commercial quantities and not be imported for resale.
  • Professional research and professional meetings in Cuba: Section 515.564 includes a general license authorizing persons subject to U.S. jurisdiction to travel to Cuba for purposes of attending or organizing professional meetings or conferences in Cuba.
    • OFAC is removing the restriction in section 515.564(a)(2)(i) that the purpose of such meeting or conference not be for the promotion of tourism in Cuba, and making additional conforming edits.
    • OFAC is also taking this opportunity to clarify section 515.564 by removing paragraphs (a)(1)(ii) and (a)(2)(iii), which included language inconsistent with adjacent paragraphs. Remittances for third-country national travel.
    • OFAC is amending section 515.570 to authorize persons subject to the jurisdiction of the United States to make remittances to third- country nationals for travel by third- country nationals to, from, and within Cuba, provided that such travel would be authorized by a general license if the traveler were a person subject to U.S. jurisdiction.
    • OFAC is also making a clarifying change in section 515.420 to make clear that the interpretation in that section relates only to persons subject to U.S. jurisdiction.
  • Recordkeeping requirements for providers of travel and carrier services: In the case of customers traveling pursuant to a specific license, in order to ease the burden on persons subject to U.S. jurisdiction that provide authorized travel or carrier services pursuant to section 515.572.
    • OFAC is amending section 515.572(b)(1) to make clear that such service providers may collect and retain either a copy of the traveler’s specific license or the traveler’s specific license number.

Humanitarian-Related Transactions Additional grants, scholarships, and awards

  • Sections 515.565 and 515.575 previously authorized the provision of grants, scholarships, and awards in which Cuba or Cuban nationals have an interest (including as recipients) with respect to educational and humanitarian activities, respectively.
    • OFAC is now expanding that authorization to authorize the provision of grants, scholarships, and awards in two additional categories of activities: scientific research and religious activities. OFAC is consolidating these authorizations in new section 515.590 and making conforming edits to sections 515.565 and 515.575.
  • Services related to developing Cuban infrastructure. OFAC is adding section 515.591 to authorize persons subject to the jurisdiction of the United States to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining, and enhancing Cuban infrastructure, consistent with the export or reexport licensing policy of the Department of Commerce. ‘‘Infrastructure’’ in this case means systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.

Other Amendments

  • Definition of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.
    • OFAC is amending sections 515.337 and 515.338 to narrow the definitions in these sections.
  • Additional technical and conforming edits.
    • OFAC is also making several technical and conforming edits, including adjusting a cross-reference in the note to section 515.421(a)(4) to reflect that the payment and financing terms for agricultural commodities are now located in section 515.533(a)(4);
      • Removing sections 515.531 and 515.803 as obsolete; adding the word ‘‘repair’’ to the general licenses for certain travel- related transactions in sections 515.533 and 515.559 to clarify that travel for such purposes has been within the scope of the existing authorizations;
      • Removing paragraphs (a) and (b) of section 515.536, as all activities described in such paragraphs are authorized by the general license in section 515.562 relating to official business of the U.S. government;
      • Correcting the cross-reference in section 515.560(c)(6)(ii) to the definition of depository institution to be section 515.333; adding the words ‘‘paragraphs (a)(1) through (a)(4)’’ in the first sentence of section 515.572(b)(1) to clarify that records pertaining to passengers do not need to be maintained for transactions authorized pursuant to paragraph (a)(5) of section 515.572;
      • Removing a duplicative ‘‘subject’’ from Note 1 to section 515.578(a); and adding the word ‘‘authorized’’ to complete the sentence in section 515.584(c).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25032.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury’s joint fact sheet, and BIS’s updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

Publication of New Cuba-Related Frequently Asked Questions

Tuesday, August 9th, 2016 by Danielle McClellan

(Source: OFAC)

On July 8, 2016, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) updated its Frequently Asked Questions regarding Cuba to issue two new FAQs (#43 and #50) regarding the use of the U.S. dollar in certain transactions.

For more information on this specific action, please visit this page.

BIS & OFAC Slightly Relax Controls on Cuba

Wednesday, April 6th, 2016 by Danielle McClellan

By: Danielle McClellan

On March 16, 2016, the Bureau of Industry and Security (BIS) published a final rule amending the Export Administration Regulations (EAR) by allowing vessels departing the US on temporary sojourn to Cuba with cargo for other destinations to travel to Cuba under a license exception instead of having to obtain a license for the cargo. The rule also allows exports of certain items to persons authorized by the Department of the Treasury to establish and maintain a physical or business presence in Cuba. Finally, the rule adopts a licensing policy of case-by-case review for exports and reexports of items that would enable or facilitate export of items produced by the private sector in Cuba (subject to certain limitations).

Specific Changes to the EAR:

This rule revises § 736.2(b)(8) of the EAR, which prohibits shipments from transiting certain destinations, to explicitly state that the prohibition does not apply if a license or license exception authorizes the in-transit shipment.

  • This rule revises § 740.15(d)(6) of the EAR to authorize temporary sojourn to Cuba of a vessel carrying cargo destined to other countries provided that such cargo departs with the vessel at the end of its temporary sojourn to Cuba, does not enter the Cuban economy and is not transferred to another vessel while in Cuba.
  • This rule revises § 740.21(e) to remove the individual references to categories of persons authorized by OFAC to establish and maintain a physical or business presence in Cuba pursuant to 31 CFR 515.573, and to authorize exports and reexports to all such persons and to persons whose physical or business presence is authorized by a specific license issued by OFAC.
  • This rule revises § 746.2(b)(3)(i), to add a paragraph(b)(3)(i)(D), which sets a policy of case-by-case review of items that will enable or facilitate export from Cuba of items produced by the Cuban private sector.
  • It also revises Note 1 to clarify that the license condition described therein is intended to preclude use of items authorized by licenses bearing that condition from being reexported from Cuba or being used to enable or facilitate exports from Cuba that primarily generate revenue for the state.

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-03-16/pdf/2016-06019.pdf
In addition to the changes to the EAR, The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations to further implement these changes along with facilitating travel to Cuba for authorized financial transactions, and authorize additional business and physical presence in Cuba.

Specific Changes to the Cuban Assets Control Regulations:

  • OFAC is amending section 515.565(b) to remove the requirement that people-to-people educational travel be conducted under the auspices of an organization that sponsors such exchanges. This section now authorizes individuals to travel to Cuba provided that, among other things, the traveler engage while in Cuba in a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba.
  • OFAC is amending section 515.571 to remove the limitation on the receipt of compensation in excess of amounts covering living expenses and the acquisition of goods for personal consumption by a Cuban national present in the United States in a non- immigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government. New section (a)(5)(i) explicitly authorizes the receipt of any salary or other compensation consistent with the individual’s non-immigrant status or other non-immigrant travel authorization, provided that the recipient is not subject to any special tax assessment by the Cuban government in connection with the receipt of the salary or other compensation.
  • New section 515.571(e) authorizes all transactions related to the sponsorship or hiring of a Cuban national to work in the United States and provides that an employer may not make additional payments to the Cuban government in connection with the sponsorship or hiring of a Cuban national. Section 515.571(e) also authorizes transactions in connection with the filing of an application for non- immigrant travel authorization. OFAC is also making conforming edits in section 515.560(d)(3) and the Note to section 515.565(a)(5).
  • OFAC is adding section 515.585(c) to authorize individuals who are persons subject to U.S. jurisdiction and who are located in a third country to engage in the purchase or acquisition of merchandise subject to the prohibitions in section 515.204, including Cuban-origin goods, for personal consumption while in a third country, and to receive or obtain services from Cuba or a Cuban national that are ordinarily incident to travel and maintenance within a third country. This provision does not authorize the importation of such merchandise into the United States, including as accompanied baggage. OFAC is making a conforming change to section 515.410.
  • OFAC is amending section 515.584(d) to authorize U-turn transactions in which Cuba or a Cuban national has an interest to be conducted through the U.S. financial system. This provision authorizes funds transfers from a bank outside the United States that pass through one or more U.S. financial institutions before being transferred to a bank outside the United States where neither the originator nor the beneficiary is a person subject to U.S. jurisdiction. Transactions through the U.S. financial system that do not meet these criteria, including all transactions where the originator or beneficiary is a person subject to U.S. jurisdiction, remain prohibited unless otherwise authorized or exempt under the Regulations.
  • OFAC is also making conforming edits to section 515.584(e), regarding unblocking of certain previously blocked funds transfers.
  • OFAC is adding new section 515.584(g) to authorize U.S. banking institutions to process U.S. dollar monetary instruments presented indirectly by Cuban financial institutions. Correspondent accounts used for transactions authorized pursuant to this section may be denominated in U.S. dollars. This section does not authorize banking institutions subject to U.S. jurisdiction to open correspondent accounts for banking institutions that are nationals of Cuba.
  • OFAC is adding new section 515.584(h) to authorize banking institutions to open and maintain accounts solely in the name of a Cuban national located in Cuba for the purposes only of receiving payments in the United States in connection with transactions authorized pursuant to or exempt from the prohibitions of this part and remitting such payments to Cuba. This provision would allow, for example, a Cuban national author located in Cuba to open an account with a bank or online payment platform in the United States to receive payments for sales of her book. This provision is in addition to the two existing authorizations for banking institutions to operate certain accounts on behalf of certain Cuban nationals. See Note to paragraph (a) of section 515.571(a)(5) and section 515.585(b).
  • To avoid confusion, OFAC also is making conforming edits to the Note to section 515.571(a)(5) to clarify that all three account authorizations extend to banking institutions.
  • OFAC is amending section 515.573 to authorize additional persons subject to U.S. jurisdiction to establish a business and physical presence in Cuba.
  • OFAC amended section 515.573 to authorize certain persons subject to U.S. jurisdiction to establish a physical presence, such as an office or other facility, in Cuba, to facilitate authorized transactions. OFAC is now expanding this authorization to include the following additional categories of persons subject to U.S. jurisdiction: entities engaging in non-commercial activities authorized by section 515.574 (Support for the Cuban People); entities engaging in humanitarian projects set forth in section 515.575(b) (Humanitarian projects); and private foundations or research or educational institutes engaging in transactions authorized by section 515.576.
  • OFAC is also adding a note to clarify that the activities that may be carried out by exporters of items exported or reexported pursuant to authorization by the Department of Commerce or OFAC, or that are otherwise exempt, at a physical presence authorized by this section include the assembly of such items.
  • OFAC is adding a new provision in section 515.565 to authorize the provision of educational grants, scholarships, or awards to a Cuban national or in which Cuba or a Cuban national otherwise has an interest. This could include, for example, the provision of educational scholarships for Cuban students to pursue academic studies for a degree. OFAC is also adding a note to section 515.575(b) to clarify that the existing authorization includes provision of grants or awards for humanitarian projects in or related to Cuba that are designed to directly benefit the Cuban people as set forth in that section. Telecommunications and internet- related services.
  • OFAC is amending section 515.578 to allow the importation of Cuban-origin software. OFAC is also making several technical and conforming edits. In particular, OFAC is correcting a typographical error in section 515.533(d)(2).
  • OFAC is also conforming the language of the general authorization in section 515.559(d) to the corresponding authorization in section 515.533(d).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-03-16/pdf/2016-06018.pdf

A Few Things That Can Be Exported to Cuba

Tuesday, March 29th, 2016 by Danielle McClellan

By: Danielle McClellan

BIS has released a final rule revising the licensing policy from possible approval on a case-by case-basis to a general policy of approval for exports and reexports of the following to Cuba:

  • Telecommunications items that would improve communications to, from, and among the Cuban people;
  • Certain commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba;
  • Commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public; and
  • Agricultural items that are outside the scope of “agricultural commodities” as defined in part 772 of the EAR (such as insecticides, pesticides and herbicides) as well as agricultural commodities not eligible for License Exception Agricultural commodities (AGR) (such as those that are specified in an entry on the Commerce Control List, i.e., are not designated EAR99).
  • Items that are necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises. Given a substantial increase in air travel to and from Cuba, BIS is making the change to emphasize the importance of civil aviation safety and to recognize that access to aircraft used in international air transportation that meet U.S. Federal Aviation Administration and European Aviation Safety Agency operating standards by Cuban state-owned enterprises contributes to that safety.

This rule also amends the exceptions to the general policy of denial by also adopting a case-by-case review policy for exports and reexports of some of the following:

  • Exports and reexports to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people.
  • Exports and reexports of items for agricultural production, artistic endeavors (including the creation of public content, historic and cultural works and preservation), education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation and public transportation.
  • Exports and reexports of items for use in construction of: facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people.
  • Additionally, it includes exports and reexports to wholesalers and retailers of items for domestic consumption by the Cuban people.

The rule also adds the term “reexport” to the existing statement of a policy of case-by-case review of applications for aircraft or vessels on temporary sojourn to Cuba. Finally, this rule will consolidate the statements of licensing policy for exports and reexports to Cuba (previously the policies were in six different paragraphs spread in different places with inconsistent wording).

Additionally, OFAC released a final rule coordinating with these changes set forth by BIS. OFAC is making amendments to the Cuba Sanctions Regulations with respect to non-agricultural export trade financing and travel and related services:

  • Section 515.533(a) will remove the former limitations on payment and financing terms for all exports from the United States or reexports of 100 percent U.S.-origin items from a third country that are licensed or otherwise authorized by the Department of Commerce, other than exports of agricultural items or commodities. As required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1), such agricultural exports continue to be authorized only if one of the payment and financing terms specified in the statute are used.
  • Section 515.584 will add an authorization for depository institutions to provide financing for such authorized exports and making a conforming change to section 515.421.
  • Carrier services by air: section 515.572 will be amended to authorize the entry into blocked space, code-sharing, and leasing arrangements to facilitate the provision of carrier services by air authorized pursuant to section 515.572(a)(2), including the entry into such arrangements with a national of Cuba.
  • Temporary sojourn: section 515.533 will be amended to authorize travel-related and other transactions directly incident to the facilitation of the temporary sojourn of aircraft and vessels as authorized by the Department of Commerce for travel between the United States and Cuba, including by certain personnel required for normal operation and service on board a vessel or aircraft or to provide services to a vessel in port or aircraft on the ground.
  • Transactions related to information and informational materials: section 515.545 will be  expand the general license authorizing travel- related and other transactions that are directly incident to the export, import, or transmission of informational materials to include professional media or artistic productions in Cuba. Such productions include media programs (such as movies and television programs), music recordings, and the creation of artworks. OFAC is removing a restriction in an existing general license and explicitly authorizing transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments. OFAC also is making a conforming change to section 515.206.
  • Professional meetings: section 515.564 will now authorize travel-related and other transactions to organize professional meetings or conferences in Cuba.
  • Public performances, clinics, workshops, athletic and other competitions, and exhibitions: section 515.567 will now authorize travel-related and other transactions to organize amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC is also removing the existing requirements for certain events that all U.S. profits from the event after costs be donated to an independent nongovernmental organization in Cuba or a U.S.-based charity and that workshops and clinics be organized and run, at least in part, by the authorized traveler.
  • Humanitarian projects: section 515.575 will expand the list of authorized humanitarian projects to include disaster preparedness and response.

BIS Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-01-27/pdf/2016-01557.pdf

OFAC Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-01-27/pdf/2016-01559.pdf

BIS Follows Suit with OFAC Changes and Adjusts EAR for the Cuba People

Thursday, October 1st, 2015 by Danielle McClellan

By: Danielle McClellan

Effective September 21, 2015 BIS amended the Export Administration Regulations (EAR) to expand the scope of License Exception Support for the Cuban People (SCP) and many other changes as noted below.  Although BIS made a wide range of changes, the changes did little to open up opportunities for most companies to do business in Cuba. See the full Federal Register Notice: http://www.gpo.gov/fdsys/pkg/FR-2015-09-21/pdf/2015-23495.pdf.

Expansion of License Exception Support for the Cuban People (SCP)

  • BIS revised EAR § 740.21(b) and (d)(1) to remove a requirement that items must be sold or donated when exported or reexported to authorized end-users in Cuba under License Exception Support for the Cuban People (SCP). Paragraph (b) authorizes certain exports and reexports to improve living conditions and support independent economic activity in Cuba. Paragraph (d)(1) authorizes certain exports and reexports to improve the free flow of information to, from, and among the Cuban people. When License Exception SCP was created in January 2015, BIS included text regarding sales or donations in paragraphs (b) and (d)(1) to clarify that the provisions were not limited to exports and reexports of donated items. However, the construction of the sentences addressing sales or donations inadvertently precluded other types of exports and reexports intended to be covered under the license exception, such as those involving leased or loaned items. Consequently, BIS is removing the portions of paragraphs (b) and (d)(1) of License Exception SCP that refer to sales or donations of items to eliminate those unintended restrictions.
  • BIS revised paragraph (c)(2) of License Exception SCP to authorize certain temporary reexports to Cuba. Paragraph (c)(2) previously authorized certain temporary exports of items to Cuba from the United States for use in scientific, archeological, cultural, ecological, educational, historic preservation, or sporting activities, or in the traveler’s professional research. This change authorizes travelers departing the United States or a foreign country to temporarily export or reexport authorized items to Cuba for eligible end-uses. Additionally, this rule adds professional meetings to the list of eligible end-uses in paragraph (c)(2). This rule also introduces a requirement that the items remain under the traveler’s ‘‘effective control.’’ The existing EAR definition of effective control in § 772.1 applies to this use of the term. Eligible items continue to be limited to items subject to the EAR but not specified in any Export Control Classification Number (ECCN), i.e., EAR99) or controlled on the Commerce Control List (CCL) only for anti- terrorism reasons.
  • BIS added a new paragraph (d)(4) to  SCP to authorize exports and reexports of commodities and software to individuals and private sector entities in Cuba that will be used to develop software that will improve the free flow of information or that will support the private sector activities described in paragraph (b) of License Exception SCP.  The Cuban Government and Communist Party and certain officials thereof are designated as ineligible end users for commodities and software exported under paragraph (d)(4). Existing text in paragraph (d) limits the commodities and software authorized for export or reexport under this new paragraph (d)(4) to those that are either EAR99 or controlled on the CCL for anti- terrorism reasons only. For example, to qualify for export or reexport under new paragraph (d)(4), a general purpose software development kit must be either EAR99 or controlled in an ECCN where the only reason for control that applies to that kit is anti-terrorism and the kit’s use in Cuba must be to develop software that will improve the free flow of communication and/or that will support the private sector activities described in paragraph (b) of License Exception SCP.
  • BIS added a new paragraph (e) to License Exception SCP. Paragraph (e)(1) authorizes the export and reexport to Cuba of certain items for use by United States Persons (as defined in § 772.1 of the EAR) to establish, maintain, or operate a physical presence in Cuba. Any resulting payments associated with such a physical presence, such as lease payments, are permitted only to the extent authorized by § 515.573 of the OFAC Cuban Assets Control Regulations (31 CFR 515.573). To be eligible for the exception under paragraph (e)(1), the end-users must be (1) entities organizing or conducting educational activities in Cuba authorized by OFAC pursuant to 31 CFR 515.565(a); (2) entities providing mail or parcel transmission services authorized by OFAC pursuant to 31 CFR 515.542(a) or providing cargo transportation services in connection with trade involving Cuba authorized by OFAC or exempt from the prohibitions of 31 CFR part 515 as specified in 31 CFR 515.206; (3) religious organizations engaging in religious activities in Cuba authorized by OFAC pursuant to 31 CFR 515.566; (4) persons engaged in transactions authorized by OFAC pursuant to 31 CFR 515.559(b); (5) persons that export or reexport items to Cuba that are exempt from the prohibitions of 31 CFR part 515 as specified in 31 CFR 515.206; (6) providers of travel services or carrier services authorized by OFAC pursuant to 31 CFR 515.572; or (7) persons that export or reexport to Cuba pursuant to a license issued by BIS or a license exception authorized by § 746.2(a)(1) of the EAR.
  • Items eligible for export and reexport to Cuba pursuant to paragraph (e)(1) of License Exception SCP are limited to those designated as EAR99 (i.e., items subject to the EAR but not specified in any ECCN) or controlled on the CCL only for anti-terrorism reasons.
  • Paragraph (e)(2) of License Exception SCP authorizes the export and reexport to Cuba of certain items for use by certain additional eligible end-users to establish, maintain, and operate a physical presence in Cuba. Any resulting payments associated with such a physical presence, such as lease payments, are permitted only to the extent authorized by § 515.573 of the Cuban Assets Control Regulations.  To be eligible for paragraph (e)(2), the end-users must be authorized by OFAC to provide telecommunications services and establish telecommunications facilities pursuant to 31 CFR 515.542(b)–(e) or to provide internet-based services pursuant to 31 CFR 515.578, including subsidiaries, branches, offices, joint ventures, franchises, and agency or other business relationships with any entity or individual who is a national of Cuba. The items authorized pursuant to paragraph (e)(2) are limited to those designated as EAR99 (i.e., items subject to the EAR but not specified in any ECCN) or controlled on the CCL only for anti-terrorism reasons.
  • Paragraph (e)(3) of SCP authorizes the export and reexport to Cuba of certain items to be given away for free as gifts for promotional purposes, such as pens, notepads, hats, and t-shirts. Items eligible for export or reexport to Cuba pursuant to paragraph (e)(3) are limited to those items of a type normally given away for free as gifts for promotional purposes that are designated as EAR99.
  • BIS is creating paragraph (e) of SCP to facilitate engagement between the U.S. and Cuban people; the free flow of information to, from, and among the Cuban people; and independent economic activity in Cuba generated by Cuba’s private sector.
  • This rule also creates new paragraph (f) to SCP to authorize certain temporary (not to exceed one year) exports and reexports to Cuba of EAR99 items and items controlled on the CCL only for anti- terrorism reasons. Paragraph (f) authorizes exports and reexports of the following:
  • Commodities and software as tools of trade for use by the exporters or employees of the exporters to install, service or repair items that are subject to the EAR and that have been exported or reexported to Cuba under a license or license exception, or foreign-origin items that are not subject to the EAR but are owned and used exclusively by individuals or private sector entities but not the Cuban Government, the Cuban Communist Party or certain officials thereof in Cuba;
  • Technology as tools of trade for use by certain persons for the installation, servicing or repair of items that are subject to the EAR and that have been exported or reexported to Cuba under a license or license exception, or foreign- origin items that are not subject to the EAR but are owned and used exclusively by individuals or private sector entities but not the Cuban Government, the Cuban Communist Party or certain officials thereof in Cuba;
  • Kits of replacement parts or components for items that have been exported or reexported to Cuba under a license or license exception, or foreign- origin items that are not subject to the EAR but are owned and used exclusively by individuals or private sector entities but not the Cuban Government, the Cuban Communist Party or certain officials thereof in Cuba;
  • Commodities and software for exhibition or demonstration at trade shows or to parties eligible to receive items under License Exception SCP; and
  • Containers that are necessary for shipment of commodities being exported or reexported to Cuba under a license or license exception; BIS is creating paragraph (f) of License Exception SCP to help support authorized travel and commerce.

Expansion of License Exception Consumer Communications Devices (CCD)

  • BIS revised EAR § 740.19(a) to remove references to sales or donations of eligible items authorized under License Exception CCD. License Exception CCD authorizes certain exports and reexports to improve the free flow of information to, from, and among the Cuban and Sudanese people. When BIS created CCD in September 2009 to authorize certain exports and reexports to Cuba, the license exception included a donation requirement. BIS revised License Exception CCD in January 2015 to authorize sales, in addition to donations, and to update the list of eligible items. (Sudan was added as an authorized destination in February 2015.) Instead of merely removing the word ‘‘donated’’ from paragraph (a) of License Exception CCD, the January 2015 revision added the phrase ‘‘either sold or’’ to that paragraph. That phrasing inadvertently precluded other types of exports and reexports intended to be authorized by the license exception, such as those involving leased or loaned items. Consequently, this rule removes phrase ‘‘either sold or donated’’ from paragraph (a) to eliminate that unintended restriction.

Availability of License Exception Aircraft, Vessels and Spacecraft (AVS)

  • BIS revised EAR § 746.2(a)(1)(x) to make paragraphs (b) and (d) of License Exception AVS available for Cuba.  BIS also amended EAR § 740.15(b) and (d) to add to License Exception AVS paragraphs (b)(4) and (d)(6) described below that apply only to Cuba.
  • Paragraph (b) of AVS authorizes certain exports and reexports of equipment and spare parts for permanent use on vessels and aircraft departing the United States. The paragraph also authorizes certain exports of ship and plane stores for use on board vessels and aircraft departing the United States. Paragraph (d) of AVS authorizes certain exports and reexports of vessels on temporary sojourn. Paragraph (a) of AVS, which authorizes certain exports and reexports of aircraft on temporary sojourn, was, prior to publication of this rule, available for Cuba.
  • BIS added a note to paragraph (a) prohibiting an aircraft exported or reexported to a country pursuant to that paragraph from remaining in that country for more than seven consecutive days before it departs for a country to which it may be exported without a license or the United States.
  • BIS added new paragraph (b)(4) to AVS to specify that the commodities eligible for export and reexport to Cuba pursuant to paragraph (b) are limited to those designated as EAR99 or controlled on the CCL only for anti-terrorism reasons.
  • Additionally, this rule adds new paragraph (d)(6) to License Exception AVS. Paragraph (d)(6) provides that only certain categories of vessels, when engaged in specified activities are eligible for the license exception when destined for Cuba. The types of vessels and activities eligible for temporary sojourn to Cuba are as follows.
  1. Cargo vessels for hire for use in the transportation of items.
  2. Passenger vessels for hire for use in the transportation of passengers and/ or items. Vessels used to transport both passengers and items to Cuba may transport automobiles only if the export or reexport of the automobiles has been authorized by a separate license issued by BIS (i.e., not authorized by license exception). The export or reexport to Cuba of personally owned vehicles is not normally necessary to support authorized travel. However, if the need arises, the exporter or reexporter may submit a license application to BIS for review pursuant to the licensing policy in § 746.2 of the EAR.
  3. Recreational vessels destined for Cuba that that are used in connection with travel authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC).
  • Finally, BIS added a note to paragraph (d) prohibiting a vessel exported or reexported to a country pursuant to that paragraph from remaining in that country for more than 14 consecutive days before it departs for a country to which it may be exported without a license or the United States.
  • BIS is making paragraphs (b) and (d) of AVS available for Cuba to help facilitate authorized travel and commerce. For clarity, BIS is adding notes to paragraphs (a) and (d) specifying the amount of time an aircraft or vessel exported or reexported to a country pursuant to the paragraphs may remain in that country. Previously, BIS interpreted paragraph (a) to authorize temporary sojourns consisting of only one overnight stay while in-country (see 57 FR 30899, July 13, 1992). BIS selected the time periods of seven days for aircraft and 14 days for vessels based on its experience in licensing aircraft and vessels for temporary sojourn to Cuba. The vast majority of such licenses were for stays of seven days or less for aircraft and 14 days or less for vessels.

New Licensing Policy for Civil Aviation Safety

  • BIS amended the licensing policy for Cuba in EAR § 746.2 to add a policy of case-by-case review of license applications for exports and reexports of items to ensure safety in civil aviation and safe operation of commercial passenger aircraft. Items that will be reviewed pursuant to this policy include aircraft parts and components related to safety of flight, weather observation stations, airport safety equipment, and commodities used for security screening of passengers. BIS is adding this licensing policy to support international aviation and passenger safety.

Scope of License Requirements for Deemed Exports and Reexports

  • This rule amends the license requirements for Cuba in § 746.2 of the EAR to specify that a license is required for the release of technology or source code on the CCL to Cuban nationals in the United States or a third country, but not for the deemed export or deemed reexport of technology or source code designated as EAR99.

Technical Corrections to License Exception Agricultural Commodities (AGR)

On July 22, 2015, BIS published a rule implementing the rescission of Cuba’s State Sponsor of Terrorism designation (80 FR 43314). Among other amendments, that rule removed Cuba from Country Group E:1, which changed the general de minimis level for Cuba from 10 to 25 percent. Although the rule made certain technical and conforming changes to the EAR, BIS overlooked references to the former 10 percent de minimis level in paragraph (b)(3) of License Exception Agricultural Commodities (AGR) in § 740.18 of the EAR. Consequently, this rule corrects the de minimis percentages referenced in paragraph (b)(3) of License

OFAC Makes Many Changes that Slightly Relax Some Restrictions on Cuba

Thursday, October 1st, 2015 by Danielle McClellan

The Office of Foreign Assets Controls (OFAC) has published a final rule, effective September 21, 2015, amending the current Cuban Assets Control Regulations to implement elements of the President’s policy to empower the Cuban people from December 17, 2014. Full Federal Register Notice: http://www.gpo.gov/fdsys/pkg/FR-2015-09-21/pdf/2015-23587.pdf.

Generally speaking, the changes are another measured, non-dramatic relaxation of US restrictions on Cuba.  For exporters, the main impact focuses on providing telecomm and internet services to Cuba and also importing Cuban mobile apps.  The changes also relax controls on establishing a physical presence in Cuba and exports and reexports related to EAR License Exceptions CCD and SCP.  OFAC also relaxed its rules related to travel to Cuba and related travel services.  The changes also relax the restrictions related to providing educational services to Cuba and Cuban nationals.

Some of the highlights of the OFAC changes:

Telecommunications and Internet- based Services

  • Subsidiaries, joint ventures, and other business relationships with Cuban individuals and entities. In order to further enhance the free flow of information to, from, and among the Cuban people and to better provide efficient and adequate telecommunications services between the United States and Cuba, OFAC is amending sections 515.542 and 515.578 to authorize persons subject to U.S. jurisdiction to establish and maintain a business presence in Cuba, including through subsidiaries, branches, offices, joint ventures, franchises, and agency or other business relationships with any Cuban individual or entity, to provide authorized telecommunications and internet-based services. OFAC is also authorizing persons subject to U.S. jurisdiction to enter into licensing agreements related to services authorized by section 515.542(b) through (d) and section 515.578(a), and to market such services. OFAC is amending section 515.505 to unblock any entity, office, or other sub-unit established pursuant to sections 515.542 and 515.578.
  • Mobile applications. To further enhance the free flow of information to, from, and among the Cuban people, OFAC is adding a provision in section 515.578 to authorize the importation into the United States of Cuban-origin mobile applications. In addition, OFAC is authorizing the employment of Cuban nationals by persons subject to U.S. jurisdiction to develop such mobile applications.
  • Additional internet-based services and services related to additional authorized exports. In the January 2015 amendments, OFAC authorized services beyond those authorized in section 515.533 related to items exported pursuant to the EAR License Exception Consumer Communications Devices (CCD), certain non-U.S.-origin items located outside the United States, and certain software not subject to the EAR. These services include software design, business consulting, information technology management, and other services to install, repair, and replace such items. OFAC amended 515.578 to expand the permitted services to include training related to the installation, repair, or replacement of such items. OFAC also expanded the authorization to extend to services related to exports of consumer communications devices not eligible for License Exception CCD but authorized pursuant to an individual license from the Department of Commerce and to services related to exports authorized pursuant to the EAR License Exception Support for the Cuban People (SCP) of certain commodities and software that will be used by individuals or private sector entities to develop software that will improve the free flow of information or that will support certain private sector activities. OFAC also amended 515.578 to authorize persons subject to U.S. jurisdiction to provide services related to all such items that were exported to Cuba from a third country. OFAC also removed a restriction on organizations administered or controlled by the Cuban Government or Communist Party with respect to certain internet-based services (such as instant messaging, chat and email, and social networking) authorized pursuant to section 515.578(a)(1), while maintaining this restriction on provision of these services to prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.

Physical Presence in Cuba

  • Physical presence in Cuba for certain persons. OFAC is amending section 515.573 to authorize certain persons subject to U.S. jurisdiction to establish a physical presence, such as an office or other facility, in Cuba, to facilitate authorized transactions. This authorization covers the following: news bureaus; exporters of goods authorized for export pursuant to sections 515.533 or 515.559; providers of authorized mail and parcel transmission services and cargo transportation services; providers of telecommunications or internet-based services; entities organizing or conducting certain educational activities; religious organizations; and providers of travel and carrier services. In addition, OFAC is authorizing these individuals and entities to open and maintain bank accounts at financial institutions in Cuba for use for authorized transactions, and to close such accounts. The prior provisions in this section authorizing certain transactions by news organizations have been fully incorporated into the revised section. OFAC is also amending section 515.505 to unblock any entity, office, or other sub-unit established pursuant to section 515.573, as well as to unblock any individual authorized to establish domicile in Cuba pursuant to section 515.573(a)(4).

Other Changes

  • Educational activities. OFAC is expanding the general license in section 515.565 to allow additional educational activities that are authorized in other sanctions programs administered by OFAC, including the provision of standardized testing services and internet-based courses to Cuban nationals, as well as to authorize U.S. and Cuban universities to engage in academic exchanges and joint non- commercial academic research. Ordinarily incident transactions. OFAC is issuing interpretive guidance in new section 515.421 to clarify that, with certain exceptions, transactions ordinarily incident to a licensed transaction and necessary to give effect thereto are also authorized. In response to public inquiries, OFAC is providing a specific example in this section to clarify that ordinarily incident transactions include payments made using online payment platforms for authorized transactions.
  • Commercial Transactions Provision of goods and services to Cuban nationals located in a third country. OFAC is amending section 515.585 to expand the existing authorization to allow all persons subject to U.S. jurisdiction to provide goods and services to Cuban national individuals located in a third country. In addition, OFAC is adding an authorization to allow banking institutions to open, maintain, and close bank accounts for such Cuban nationals.
  • Air ambulances and emergency medical services. OFAC has had a favorable specific licensing policy and has authorized on a case-by-case and expedited basis air ambulances to travel to and from Cuba and to evacuate individuals requiring medical care. In such exigent circumstances, OFAC has allowed U.S. medical and other essential personnel to provide services to individual travelers in need of medical attention, regardless of nationality or the purpose of the individual’s travel to Cuba. OFAC is amending section 515.548 to generally authorize such services. To clarify the availability of nonscheduled emergency medical services in the United States, OFAC also is adding a new general license in section 515.589.
  • Humanitarian projects. OFAC is amending section 515.575 to explicitly include disaster relief and historical preservation as authorized humanitarian projects. Cuban official missions. OFAC is amending section 515.586 to authorize funds transfers on behalf of official missions of the Government of Cuba in the United States.