On September 21, the Department of Commerce, Bureau of Industry and Security (BIS), and the Department of the Treasury, Office of Foreign Assets Control (OFAC), announced revised regulations further easing restrictions on transactions with Cubans and Cuban nationals involving persons subject to U.S. jurisdiction. This coordinated action advances liberalized relations with Cuba, supplements the sweeping changes to the Cuba sanctions regime issued earlier this year, and is effective immediately.
Major changes in the amended regulations clarify that transactions ordinarily incident to a licensed transaction and necessary to give effect thereto are authorized and facilitate additional travel and travel-related transactions to Cuba for authorized purposes. Generally, the changes give practical effect to earlier revisions to OFAC and BIS regulations, but questions remain regarding how they may be interpreted in certain circumstances. OFAC and BIS issued updated frequently asked questions (FAQs) to assist in interpretation of the revised regulations.
Office of Foreign Assets Control
OFAC's amendments to the Cuban Assets Control Regulations expand the scope of numerous general licenses, create new general licenses, and remove limits on remittances. Several significant changes are highlighted below:
- Depository institutions may maintain accounts for Cuban nationals present in the U.S. in a non-immigrant status and may keep the account open while the Cuban national is outside the U.S., provided access to the account is permitted from inside the U.S. only.
- Authorized U.S. travelers may maintain a bank account in Cuba to access funds for authorized transactions while in Cuba.
- Clarifies that transactions ordinarily incident to and necessary to give effect to a licensed transaction may be made using online payment platforms.
- Expands the general license authorizing transactions with official missions of Cuba to the U.S. to include international funds transfers.
- Removes limit on donative remittances to persons who are not prohibited officials of the government of Cuba or prohibited members of the Cuban Communist Party.
- Remittances that were previously blocked because they exceeded prior maximum thresholds may now be unblocked. Remittances to the U.S. from Cuba or from Cuban nationals in third countries will be authorized by general license.
Travel and Travel Services
- Removes the 180-day restriction on entry to a U.S. port after calling at a Cuban port for vessels providing passenger service to authorized travelers or carrying authorized cargo between the U.S. and Cuba.
- Authorizes carrier services (of "authorized travelers") to and from Cuba by vessel, provided the vessel does not call at a third country. While the vessel is traveling to, from, or within Cuba, including while it is docked at a Cuban port, it may provide lodging services.
- Expands categories of permissible travel to Cuba, although travel to Cuba for tourism remains prohibited.
Telecommunications and Internet-Service
- U.S. persons may establish a business presence in Cuba, including through joint ventures with Cuban entities, to provide telecommunications and internet-based services. U.S. persons may also enter into licensing agreements related to such services.
- U.S. persons may export services in support of telecommunications and internet-based services, including training related to the installation, repair, or replacement of such items.
- Cuban-made mobile applications may be imported into the U.S. In addition, U.S. companies may hire Cuban nationals to develop mobile applications.
Other Commercial Transactions
- U.S. persons may provide goods and services to Cuban nationals located outside of Cuba, provided there is no direct or indirect commercial exportation of goods or services to or from Cuba.
- Allows for legal services, emergency medical services, and diplomatic activities.
- Permitted educational activities are expanded to include the provision of standardized testing services and internet-based courses to Cuban nationals.
Bureau of Industry and Security
BIS also amended the Export Administration Regulations (EAR) by expanding and clarifying application of previously issued license exceptions and instituted a new licensing policy for civil aviation safety, among other changes.
Expands License Exception Aircraft, Vessels and Spacecraft (AVS)
- AVS amended to expand the categories of vessels authorized for temporary sojourn in Cuba, including: (1) cargo vessels for hire for use in transporting items; (2) passenger vessels for hire for use in transporting passengers or items; and (3) recreational vessels used in connection with travel authorized by OFAC.
- Aircraft on temporary sojourn in Cuba may remain in Cuba for 7 consecutive days. Other vessels may remain in Cuba for up to 14 consecutive days.
- BIS licensing policy is changed to a "case-by-case" review of applications to export or reexport to Cuba items related to safety of civil aviation and commercial passenger aircraft.
Expands License Exception Support for the Cuban People (SCP)
- Adds authorization for temporary export and reexport (not to exceed 1 year) to Cuba of items designated as EAR99 or on the Commerce Control List (CCL) only for anti-terrorism (AT) reasons that are "tools of trade," replacement parts, items for demonstration or exhibition, and "containers" for shipment of such commodities.
- Clarifies that such items temporarily exported to Cuba from the U.S. must remain under the traveler's "effective control."
- Adds authorization to export and reexport EAR99 or AT-only commodities and software to individuals and private sector entities in Cuba to develop software to improve "free flow of information" or support private sector activities enumerated in SCP.
- Adds authorization to export and reexport EAR99 or AT-only items for use by U.S. persons to establish and maintain a physical business presence in Cuba to engage in authorized transactions. Activities and related payments must be authorized under above-described OFAC regulations.
Amends Deemed Export and Reexport Rule
The EAR is amended to remove the requirement for a license for the deemed export or reexport of technology or source code designated as EAR99 to a Cuban national in the U.S. or a third country. Importantly, the deemed export and reexport license requirement remains for release of "controlled" technology or source (on CCL).
BIS clarifies, as of its July 22, 2015 Rule removing Cuba as State Sponsor of Terrorism (80 FR 43314), that Cuba is removed from Country Group E:1. As such, Cuba is no longer subject to the general de minimis level of 10%. This clarification confirms that Cuba is eligible for a 25% de minimis level under EAR License Exceptions. See General Order No. 3 for details regarding conditions that continue to apply to Cuba as a Country Group E:2 country.
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Despite changes in U.S. regulations, certain business activities still require prior authorization from OFAC, BIS, or both. Venable's International Trade Group is closely monitoring implementation of the revised regulations and is available to provide further information and guidance on conducting business in Cuba or with Cuban nationals.