On March 15, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced changes to its Cuban Assets Control Regulations (CACR), which aim to improve the lives of the Cuban people and encourage more active engagement between the United States and Cuba, while at the same time limiting any benefits to the Cuban government-run economy and Cuban military, police, security, and intelligence entities.
Specifically, these new rules, which took effect on March 16, 2016, expand travel opportunities to Cuba, strengthen U.S. trade and commercial opportunities in Cuba, and reduce barriers to financial transactions involving Cuba. On March 15, 2016, the Department of Commerce’s Bureau of Industry and Security (BIS) also announced a new set of rules to further relax trade restrictions on Cuba, which are discussed here.
Changes to the CACR
Travel and Related Transactions:
- People-to-People Educational Travel: Previously, U.S. persons were only authorized to travel under the general license permitting people-to-people educational travel if the trips took place under the auspices of an organization subject to U.S. jurisdiction. Under the new rule, U.S. persons may engage in people-to-people educational travel outside the auspices of such an organization, provided that the traveler engages in a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support Cuban civil society, and/or promote the Cuban people’s independence from Cuban authorities, and that will result in a meaningful interaction between the traveler and Cuban persons. Significantly, OFAC’s prohibition on tourist travel to Cuba remains in place.
- Payment of Salaries: Cuban nationals in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization are now permitted to earn a salary or compensation, consistent with their visa terms, provided that they are not subject to a special tax assessment by the Cuban government.
- Cuban-Origin Merchandise: OFAC will permit certain transactions in Cuban-origin goods by individuals for personal consumption while in a third country (e.g., Americans traveling in Europe can purchase and consume Cuban-origin cigars while abroad). In addition, OFAC will allow U.S. persons to receive or obtain services from Cuba or a Cuban national that are ordinarily incident to travel and maintenance within a third country.
Banking and Financial Services:
- U-Turn Payments through the U.S. Financial System: U.S. financial institutions are now permitted to process U-turn transactions in which Cuba or a Cuban national has an interest. OFAC’s authorization covers situations where neither the originator nor beneficiary is subject to U.S. jurisdiction.
- Processing of U.S. Dollar Monetary Instruments: U.S. banking institutions are now authorized to process U.S. dollar monetary instruments that are presented indirectly by Cuban financial institutions. These instruments include cash and travelers’ checks.
- S. Bank Accounts for Cuban Nationals: U.S. banks can open and maintain bank accounts in the United States so that Cuban nationals in Cuba can receive payments in the United States for permitted or exempt transactions and remit those payments back to Cuba.
Trade and Commerce:
- Physical and Business Presence: The revised regulations expand OFAC’s existing authorization for U.S. persons to maintain a “physical presence” (e.g., office, store, or warehouse) in Cuba to include entities engaged in authorized humanitarian projects and noncommercial activities that provide support for the Cuban people, along with private foundations, research, or educational institutions engaged in authorized activities under the CACR. OFAC has also expanded its existing authorization permitting a “business presence” (e.g., joint venture) in Cuba to include exporters of goods that are authorized to Cuba or that are exempt from the CACR.
- Software Importation: OFAC now permits the importation of Cuban-origin software.
Grants and Awards:
- OFAC’s amendments allow for the provision of educational grants and awards to Cuban nationals. They also clarify that the agency’s existing authorization applies to the provision of grants and awards for the humanitarian projects permitted in the CACR.