Cuba: New Regulations Implementing Presidential Policy

On September 8, 2009, several U.S. government agencies published long awaited regulations implementing the Cuba policies announced by the White House in April 2009. These new regulations loosen restrictions on travel to Cuba, lift some restrictions on remittances and gifts to Cuba, and ease restrictions relating to telecommunications service between the United States and Cuba. The relaxation of certain restrictions may present business opportunities to some companies, and greatly expand the ability of Cuban-Americans to visit and support their relatives in Cuba. However, careful review of these new regulations is advisable. Not only are U.S. export and embargo laws notoriously complex and nuanced (and these new regulations are no exception), but in addition one can expect that there will be a learning curve as U.S. government agencies adjust to changes in policies that in some cases have been in place for a half-century.

Summary of Changes

Travel Restrictions

The relaxation of restrictions on travel and travel expenditures is likely to significantly increase the frequency of visits by Cuban-Americans and other authorized visitors to Cuba, many of whom travel on air charters by a limited number of providers authorized by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC). These relaxations include:

• Individuals may now make an unlimited number of visits per year to Cuba to visit close relatives; there is no maximum length of the visit; the authorized travel expenditure has been increased to $179 per day; and the 44-pound baggage weight limit per traveler has been lifted.
• Employees of companies that produce agricultural commodities, medicine and medical devices, as well as employees of telecommunications companies, can now travel to Cuba on a “general license” for certain business purposes. A “general license” means that travelers need not apply for and wait to receive a specific license from OFAC. However, for these business travelers a 14-day advance notice and post-trip accounting report must be submitted to OFAC, and the trip must consist of a full work schedule.

Telecommunications

The new regulations authorize and clarify policy regarding transactions relating to telecommunications services between the U.S. and Cuba. For example, the new regulations:

• provide a general license for transactions needed to establish telecommunications links between the U.S. and Cuba. (e.g., fiber optic cable, satellite links)
• change U.S. policy to allow specific licenses for telecommunications links between third countries and Cuba to facilitate communication between the U.S. and Cuba
• allow U.S. telecommunications providers to enter into and make payments for roaming agreements with telecommunications providers in Cuba
• authorize travel to Cuba by telecommunications providers’ personnel for multiple business purposes, including accompanying or servicing equipment exported to Cuba under appropriate Department of Commerce, Bureau of Industry and Security (BIS) authorization and to attend telecommunications-related professional meetings

While these new categories of general licenses do not require that an application be submitted to OFAC, certain reporting is required. The new regulations contain requirements for telecommunications providers to file notifications regarding the establishment or cessation of service, as well as annual reporting of all activity. The export of actual telecommunications equipment to Cuba will still require a BIS export license, although BIS has relaxed its criteria for reviewing these license applications.

Agricultural and Medical Products

The only new relaxation for U.S. producers of agricultural commodities, medicine, and medical products is that now their employees and agents can travel to Cuba under a general license to market and negotiate sales, subject to certain notice and reporting requirements. The requirement that licensed sales be cash-in-advance or by third country banks remains unchanged – although new guidance indicates that foreign subsidiaries of U.S. banks can directly finance licensed sales of agricultural products to Cuba.

Remittances

The new regulations significantly expand the circumstances under which funds can be sent to Cuba to support close relatives and for other limited purposes including the following:

• depository institutions (e.g., banks) can now act as remittance forwarders without receiving a special license from OFAC, subject to compliance with relevant collection/diligence regulations
• travelers visiting family members can now carry up to $3,000 for remittances to close relatives
• remittances sent through U.S. depository institutions to close family members in Cuba (with certain exceptions) are now unlimited in number and value

Gifts, Humanitarian Donations and Donated Consumer Communication Devices

The prohibition on the export of goods from the U.S. to Cuba, with certain exceptions, remains in place. However, BIS has relaxed regulations regarding gifts and humanitarian donations. Under the new rules, any individual can send a gift parcel to most individuals and charitable, religious, or educational institutions in Cuba with a value of up to $800, including many items not previously authorized.

BIS now also allows the donation and export of a wide range of consumer communication devices (including many mobile phones, laptop and personal desktop computers and computer peripherals, Bluetooth and Wi-Fi devices) to most individuals and non-governmental organizations in Cuba.

Opportunities and Risks

For certain businesses, the time may be ripe to capitalize on these changes and potential expanded market opportunities involving Cuba. However, while the new regulations relax certain restrictions, they also contain limitations and in some cases notice and reporting requirements or raise questions as to how these new regulations will be interpreted by the relevant agencies . For these reasons, before a business or organization begins utilizing the new relaxations, it is best to develop a strategy and specific internal procedures after careful analysis of the particular regulations at issue.