On June 16 2017, President Trump announced changes to the Cuba sanctions program. On November 8, 2017 OFAC released a FAQ on the new changes to the Cuban Assets Control Regulation. The Cuba Sanctions continue to generally prohibit most transactions between the US, or persons subject to US jurisdiction.
Expectations for Cuba Sanctions Changes
These new changes restrict persons subject to U.S. jurisdiction from engaging or facilitating financial transactions with entities on the State Department “Cuba Restricted List” less a few exceptions. This list includes various state-owned companies with ties to the Castro regime or bad actors in Cuba. New amendments to CACR also include changes to general licenses for travel to Cuba.
What is the Role of Travel to Cuba?
In general, to travel to Cuba a US person must fit within one of 12 categories authorized by OFAC. This includes family visits, official business of the U.S. government, foreign governments, and certain intergovernmental organization, journalistic activity, professional research and professional meetings, educational activities, religious activities, public performances, clinics, workshops, athletic and other competitions, and exhibitions, support for the Cuban people, humanitarian projects, activities of private foundations or research or educational institutes, exportation, importation, or transmission of information or informational materials, and certain authorized export transactions.
Where Can Someone Learn More Regarding Cuba-Related Sanctions?
Individual people-to-people travel, which was under the general category of educational activities and aimed at promoting cultural exchange, will no longer be authorized. “Tourist” travel to Cuba is expressly prohibited.
The guidance document released by OFAC clarifies, however, that if you travel with an organization (subject to U.S. jurisdiction) that sponsors/promotes people-to-people contact this change would not apply to you, likely to systemize cultural exchange, given OFAC’s extensive recordkeeping requirements surrounding these trips.
It is interesting to note that OFAC does not clearly define to what level an organization must promote people-to-people contact to be a qualifying organization under this rule, except for an example scenario given, which notes that the authorized organization in the example has a “full-time schedule of educational exchange activities that will result in meaningful interaction between the travelers and individuals in Cuba.”
Another change in the Cuba sanctions prohibits U.S. travelers from transacting with “entities related to the Cuban military, intelligence, or security services.” Because of how pervasive these entities are in the Cuban business arena, specifically owning a large portion of hotels and restaurants, it will be extremely important for U.S. persons in Cuba to conduct due diligence and screen any entities prior to conducting any transactions in Cuba.
Understanding Authorizations for Travel to Cuba
In general, though there are authorizations in place for U.S. persons to travel to and conduct transactions in Cuba, these authorizations are limited. Be sure to consult with OFAC Compliance or an OFAC compliance attorney on permissible travel to Cuba. It is important for US entities and foreign-based entities subject to U.S. jurisdiction that dealing with Cuba come with potential for sanctions liability and it would be wise to consult with a Cuba Sanctions Lawyer prior to engaging in such business activity.