Spring Brings Notable Changes to Cuban Assets Control Regulations (CACR)

Bilateral relations between the U.S. and Cuba heated up this month due to increased activity between the two nations. Even before President Castro welcomed President Obama to Cuba, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), and the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced further amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration. These changes went into effect on March 16, 2016, with the intent to increase the engagement and empowerment of the Cuban people by easing sanctions related to financial services; commerce and trade; and travel. Despite these updated amendments, the U.S. embargo on Cuba still stands, and ongoing statutory restrictions are prohibiting many Cuba-related activities.

Some notable changes are:

  • Authorization for self-directed “people-to-people” travel to Cuba
  • Permissions for additional categories of persons to establish business and physical presences in Cuba Opening up of particular financial transactions, including “U-turn” transactions
  • Importation into the United States of Cuban-origin software is authorized
  • Vessels on temporary sojourn in Cuba are now permitted to transit Cuba with cargo from the United States without a license
  • A new licensing policy of case-by-case review for exports and re-exports of items produced by the Cuban private sector

The self-directed people-to-people travel primarily allows students and researchers to visit Cuba to engage in full-time educational purposes activities. The OFAC authorized news agencies; exporters of goods, parcel transmission services; cargo transportation services, telecommunication services; and travel and carrier services eligible to establish a business presence in Cuba. Additionally, these entities can establish a business presence includes establishing and maintaining subsidiaries, branches, offices, joint ventures, franchises, and agency or other business relationships with any Cuban national; and entering into all necessary agreements or arrangements with such entity or individual. In a corresponding change, the EAR has been amended to authorize the export or re-export to Cuba of eligible items required to establish a “business presence” in Cuba. Only items classified as EAR99 or controlled for anti-terrorism (“AT”) reasons on the US Commerce Control List are authorized.

U.S. financial institutions now have the authority to engage in the processing of pass through or “U-turn” transactions. Cuban financial institutions can now process U.S. dollar monetary instruments, including cash and travelers’ checks. Additionally, these new regulations allow for the opening and maintaining of bank accounts in the U.S. for Cuban nationals in Cuba to receive payments in the United States. All of these provisions are subject to significant limitations. Companies and individuals interested in doing business in Cuba should carefully review these amendments before engaging in any new transactions with Cuba.

For questions or assistance with the updated regulations from Cuba, please contact OCEANAIR compliance at (781) 286-2700.