Today, the Office of Foreign Assets Control published a new updated Frequently Asked Questions Related To Cuba. The last FAQ from OFAC was on January 15, 2015, discussed in this previous post “Revised Cuba Regulations Officially Released“. There are 12 new questions discussed in OFAC’s new FAQ – made easy for your review – as all NEW questions are posted below, with some commentary in italics above the question.
What is an “organization” in the people–to-people context?
In the people-to-people context, an organization is an entity subject to U.S. jurisdiction that sponsors educational exchanges that do not involve academic study pursuant to a degree program and that promote people-to-people contact. For a complete description of what this general license authorizes and the restrictions that apply, please see 31 CFR § 515.565(b). Don’t get your personal boat ready just yet.
May an individual authorized traveler use his or her private boat to travel to Cuba?
A person subject to U.S. jurisdiction engaging in authorized travel pursuant to an OFAC general or specific license may use a personal boat for his or her travel, and the travel of the boat’s crew, to Cuba provided that he or she obtains a license from the Bureau of Industry and Security (BIS) for the temporary sojourn of the vessel. Goods exported to Cuba also require a license or must be eligible for a license exception from BIS. So far, you’ll have to get to Cuba by air if you’re looking to go via a general license. I immediately think of Resorts World Bimini fast boat from Miami to Bimini, and picture one to Cuba … perhaps when a specific license is not needed.
Are U.S. vessels, including private boats and commercial passenger ferries, permitted to carry passengers to Cuba?
The new general license allowing the provision of carrier services between the United States and Cuba is limited to the provision of such services by aircraft; it does not authorize providing carrier services by vessel. Providing carrier services by vessel would require a specific license from OFAC. This would include an individual using his or her own personal boat to transport passengers to Cuba. Vessels on temporary sojourn to Cuba also require a license from the Bureau
of Industry and Security (BIS). Goods exported to Cuba also require a license or must be eligible for a license exception from BIS.
Can U.S. financial institutions permit the use of credit and debit cards they issue by, and process credit and debit card transactions for, third-country nationals whose travel to, from, or within Cuba may not fall within the 12 categories of authorized travel?
Yes. Section 515.584(c) of the CACR authorizes all transactions incident to the processing and payment of credit and debit cards transactions for third-country nationals traveling to, from, or within Cuba.
May foreign branches of U.S. banks open and operate accounts for newly unblocked Cuban nationals in third countries?
Yes, however all funds transfers to or from such an account involving Cuba or a national of Cuba (other than an unblocked national) must be authorized or exempt.
Should financial institutions apply for a specific license to release funds transfers or accounts previously blocked solely because of the interest of an individual who has now become an unblocked national under the recent amendment to the CACR?
The CACR include general licenses authorizing as unblocked nationals certain Cuban nationals who have taken up permanent residence in the United States or a third country. For a complete description of what these general licenses authorize and the restrictions that apply, please see 31 CFR § 515.505(a). The CACR also include a general license authorizing banking institutions to unblock any account that had been previously blocked solely because of the interest therein of
one or more persons now licensed as unblocked nationals. For a complete description of what this general license authorizes and the restrictions that apply, please see 31 CFR § 515.505(b). If your situation appears to meet the terms of these general licenses, we suggest that you contact the U.S. financial institution blocking the funds transfer or account to request that they review your situation within the context of the terms of the appropriate general license. If the terms of a general license apply, there is no need to seek specific authorization from OFAC, and it is 10 OFAC’s policy not to grant specific licenses authorizing transactions for which the provisions of an outstanding general license are applicable. See 31 C.F.R. § 501.801(a).This one is incredibly important, if it was NOT authorized previously, just because it IS authorized now, does not make the previous activity automatically authorized.
Do banking institutions need to apply for a specific license to release funds transfers or accounts previously blocked pursuant to the CACR that are now authorized by general license?
If a transaction was previously blocked pursuant to the CACR at the time of the transaction, and the CACR was later amended to allow similar transactions, the earlier transaction is not unblocked unless the CACR amendment includes a general license unblocking previously blocked funds. Transactions must be authorized pursuant to the CACR at the time they are processed. To the extent not authorized by a general license, a specific license would be required to release funds transfers or unblock accounts previously blocked.
May U.S. insurers issue policies and pay claims related to group health, life, and travel insurance on behalf of third-country nationals traveling to or within Cuba?
Yes, provided that the insurance policy is as global policy. Section 515.580 of the CACR authorizes persons subject to U.S. jurisdiction to issue or provide global health, life, or travel insurance policies for individuals ordinarily resident in a country outside of Cuba who travel to or within Cuba, regardless of whether the insurance policy is issued only to that individual or to a group, such as to all employees of a particular company. For instance, a U.S. insurer may pay medical claims pursuant to a group health insurance policy to or on behalf of a covered third country national injured while traveling in Cuba. However, this provision does not authorize a person subject to U.S. jurisdiction to issue an insurance policy that is specific to travel to Cuba. A separate provision of the CACR, 31 CFR § 515.560, authorizes the provision of health, life, and travel insurance-related services for authorized U.S. travelers.
Are insurance policies that are issued to a “group” (e.g., an employer and its employees) authorized by the CACR?
Section 515.580 of the CACR authorizes global insurance policies covering individuals ordinarily resident in a country outside of Cuba traveling to Cuba. The policy may be issued to a group, such as all employees of a company. The “global” requirement means it cannot be specific to travel to Cuba. For example, it does not authorize an individual travel policy issued to a traveler specifically to cover a planned trip to Cuba. It also does not authorize issuing a policy to a nonU.S. travel agent specifically to cover its traveler clients where the travel agency is solely in the business of planning trips to Cuba.
What types of projects would fall within the authorization in 31 CFR § 515.575 for microfinancing projects?
Among other things, the provision for microfinancing projects in Section 515.575 of the CACR authorizes the provision of certain financial services to unemployed, underemployed, and low income Cubans who have little or no access to conventional banks or comparable resources, and which may include a limited return on investment. In addition, Section 515.570(g)(1) of the CACR authorizes remittances to individuals and independent non-governmental entities in Cuba to support authorized microfinancing projects. These provisions would authorize, for example, relatively limited contributions of funds to support individual entrepreneurs in sectors that need access to working capital, investment loans, insurance, or training in order to start or expand their operations. Sections 515.575 and 515.570(g)(1) of the CACR do not authorize loans, extensions of credit or other financing related to transactions involving confiscated property the claim to which is owned by a U.S. national, which are prohibited by 31 CFR § 515.208. For additional guidance or fact-specific questions, we would encourage you to contact OFAC. Immediately, the 12 categories of general license travelers come to mind – no need to apply for a specific license if you fit under one of these 12 categories – so withdraw your application (and keep great records proving you truly do comply).
If a person had applied for a specific license from OFAC before the CACR was revised but now believes that the proposed activity is authorized pursuant to a general license, does that person need to wait for his or her specific license application to be adjudicated?
No. If persons meet the qualifications listed in the general license, then they do not need to wait for an official determination from OFAC regarding their specific license application. Persons who have determined they may proceed under a general license may wish to contact OFAC Licensing to withdraw existing applications.
What types of goods and services produced by independent Cuban entrepreneurs are authorized for importation into the United States from Cuba pursuant to 31 CFR § 515.582?
Pursuant to Section 515.582 of the CACR, certain goods and services produced by independent Cuban entrepreneurs, as set forth in a list maintained by the State Department on its website, are authorized for importation, and persons subject to U.S. jurisdiction may engage in associated transactions necessary to import these authorized goods and services. The State Department list provides details of the goods and services authorized for importation into the U.S. from Cuba pursuant to this provision. This list references sections and chapters of the Harmonized Tariff Schedule (HTS) of the United States to indicate categories of goods that are not eligible for importation into the United States pursuant to 31 CFR § 515.582, even if such goods were produced by independent Cuban entrepreneurs; any other goods produced by independent Cuban entrepreneurs and not covered by the listed sections and chapters of the HTS may be imported, as provided in the State Department’s Section 515.582 List and subject to compliance with all other
Jennifer Diaz, Customs & International Trade Law
April 16th, 2015