As previously reported, on December 17, 2014, President Obama announced a series of changes to the United States’ relationship with Cuba, with the goal of normalizing relations between the two countries. On January 16, 2015, 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”) brought the United States significantly closer to that goal by publishing revised Cuban Assets Control Regulations (“CACR”)¹ and Export Administration Regulations (“EAR”)² implementing President Obama’s relaxation of restrictions on financial services and travel, all of which are effective immediately.

Among other changes, the revised CACR and/or EAR:

Financial Services

• Permit U.S. financial institutions to open and maintain correspondent accounts at Cuban financial institutions, and enroll merchants and process credit and debit card purchases to facilitate the processing of authorized transactions.
• Provide general licenses for humanitarian projects and the development of private businesses, including small farms, to directly benefit the Cuban people.
• Expand the general license allowing U.S. financial institutions, including U.S.-registered broker-dealers and money transmitters, to process authorized remittances to Cuba without a specific license.

Third-Countries

• Provide a general license authorizing foreign vessels to enter the United States after engaging in trade with Cuba.
• Authorize U.S.-owned or controlled entities in third countries to provide goods and services to Cuban nationals outside of Cuba as long as the transaction does not involve exportation of goods to or from Cuba.
• Authorize the unblocking of accounts held by Cuban nationals who have permanently relocated outside of Cuba.

Export

• Redefine the term “Cash in Advance” so that in the context of exports and trade with Cuba, it means “cash before transfer of title to, and control of”.
• Create a new export licensing exception with the goal of supporting the Cuban people through export of certain building materials for private residential construction, agricultural equipment for small farmers, goods for use by private sector Cuban entrepreneurs and certain communications devices, related software, applications, hardware and services.

Telecommunications

• Provide a new general license facilitating the establishment of commercial telecommunications facilities linking third countries and Cuba.
• Create a new license exception allowing for the expert and sale of consumer communications devices, related software, applications, hardware and services.
• Provide a general license authorizing services relating to internet-based communications.

Travel

• Authorize travel to Cuba without the need for a license for, family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; 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 information materials; and certain authorized export transactions.
• Eliminate the per diem rate previously imposed on authorized travelers.
• Allow travelers to use U.S. credit and debit cards in Cuba.
• Authorize travelers to engage in transactions incident to traveling in Cuba.
• Authorize the provision of travel and air carrier services by travel agents and airlines without obtaining a specific license.
• Authorize U.S. insurers to fix insurance coverage for residents in third countries who travel to or within Cuba.

What To Expect Next

As these regulations are implemented, there is the potential for OFAC and BIS to issue interpretations and guidance where clarification is needed. In the meantime, absent congressional action, the embargo will continue subject to the types of changes President Obama is authorized to make. President Obama has said that he wants further relaxation of our current trade restrictions with Cuba. While individuals and entities should continue to comply with the current embargo, we continue to expect further policy developments in this area. Alerts will be disseminated as such developments arise.

If you have any questions or concerns about the subject of this client alert or U.S. sanctions generally, please contact Bruce G. Paulsen (212-574-1533) or Michael W. Broz (212-574-1272) at Seward & Kissel.

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¹ The revised CACR can be found at 31 CFR, part 515.

² The revised EAR can be found at 15 CFR, parts 730-744.