On January 27, 2016, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced new amendments to the Cuban Assets Control Regulations (CACR), further liberalizing U.S. trade relations with Cuba. Among these amendments include easing restrictions on the payment and financing terms for authorized exports/reexports to Cuba.
Specifically, prior to the issuance of OFAC’s new rule, payment and financing terms for all authorized exports/reexports were limited to cash-in-advance or third-country financing. As of January 27, such restrictions on payment and financing terms for authorized exports/reexports, except for agricultural commodities/items, have been removed and U.S. banks will be able to provide financing, including issuing a letter of credit for these exports/reexports. OFAC provided the following examples of permissible payment and financing terms for authorized, non-agricultural exports/reexports: payment of cash in advance; sales on an open account; and financing by third-country financial institutions or U.S. financial institutions.