January 15, 2025

U.S. Announces Steps to Ease Cuba Sanctions

Uncertainty Remains in Light of Looming Change in Presidential Administration
Holland & Knight Alert
Andres Fernandez | Gabriel Caballero Jr. | Aymee D. Valdivia | Ronald A. Oleynik | Jonathan M. Epstein | Antonia I. Tzinova | Andrew K. McAllister | Daniel A. Noste | Catherine Yepes | Kristen Jimenez

Highlights

  • The White House released a statement on Jan. 14, 2025, announcing efforts by President Joe Biden to relax sanctions on Cuba in support of the Cuban people through a series of broad steps expected to result in the release of a significant number of political prisoners in Havana.
  • President Biden announced plans to 1) lift the U.S. designation of Cuba as a State Sponsor of Terrorism, 2) issue a waiver for Title III of the Helms-Burton Act for six months beyond Jan. 29, 2025, and 3) rescind the 2017 National Security Presidential Memorandum 5 on Cuba policy to eliminate the so-called "restricted list," and by extension, the related additional limitations on engagement by U.S. persons and entities with Cuban persons and entities, beyond what is set forth under U.S. law.
  • In a letter to the U.S. Congress, President Biden expressed that the foregoing actions are "necessary to the national interest of the United States and will expedite a transition to democracy in Cuba."

Besides certain expansions on remittances in 2022, the White House, on Jan. 14, 2025, issued a statement announcing President Joe Biden's plans to relax sanctions on Cuba through a series of broad measures aimed at improving the well-being of the Cuban people. These initiatives are related to the agreement between the Catholic Church and the Cuban government for the "gradual" release of 553 political prisoners, following the imprisonment of more than 1,000 protesters after the July 11, 2021, riots on the island.

The announcement marks another Biden Administration action that represents a significant departure from Trump-era sanctions. (See Holland & Knight's previous alert, "OFAC Amends Regulations to Support Cuban People, Independent Private-Sector Entrepreneurs," May 29, 2024.) Cuba has experienced growing shortages of essential goods such as food, fuel, medicine and electricity. These shortages have driven record-breaking migration, with more than 1 million Cubans leaving the island since 2020, many of whom are heading to the U.S.

Removal as State Sponsor of Terrorism

Among the efforts announced on Jan. 14, 2025, President Biden notified Congress of his decision to remove Cuba from the State Sponsors of Terrorism list. The list currently includes only four nations: North Korea, Iran, Syria and Cuba. Cuban officials have long advocated for removal of the designation, which has led to strict economic sanctions, compounding the effects of a U.S. embargo that has persisted for more than 60 years. In May 2024, President Biden removed Cuba from a short list of countries the U.S. claims are "not cooperating fully" in its fight against terrorism. This separate designation has been widely viewed as a precursor to removing Cuba from the terrorism blacklist.

President Biden's action to remove Cuba from the list constitutes a notification to Congress. There is an additional 45-day waiting period before Cuba's removal from the list can take effect, assuming the U.S. Congress does not take any subsequent action. By way of background, then-President Barack Obama lifted the designation in 2015, but it was reimposed in January 2021. If Congress does not act, then the U.S. Department of Commerce's Bureau of Industry and Security (BIS) could issue regulations relaxing certain export controls on export to Cuba. When Sudan was removed from the list in 2021, BIS significantly opened up exports of all sensitive goods to Sudan. In contrast, because Cuba remains subject to comprehensive sanctions, the lifting of the designation only resulted in modest relaxations of export controls on Cuba (e.g., allowing for the use of certain license exceptions, more favorable licensing policy, etc.). Hence, it is unclear what the practical effect will be on export restrictions, particularly given the likely hard line the Trump Administration may take with Cuba.

Rescission of Cuba Restricted List

In addition to removal of the designation, President Biden announced steps to alleviate economic pressure on Cuba by rescinding National Security Presidential Memorandum 5. This June 16, 2017, memorandum laid the groundwork for many of the sanctions imposed or reinforced during President Donald Trump's first term in office.

The memorandum created a so-called "restricted list" of Cuban entities, including those controlled by the Cuban military and its commercial conglomerate, Grupo de Administración Empresarial S.A. (GAESA). Currently, U.S. persons and entities cannot engage in direct financial transactions with the entities on the restricted list. The rescission of this memorandum effectively removes this limitation, thereby easing additional regulations on engagement by U.S. persons and entities with Cuban persons and entities, beyond what is mandated by existing U.S. law.

Interestingly, President Biden's announcement does not reference any actions with respect to the U.S. Department of State's Cuba Prohibited Accommodations List, which lists certain properties in Cuba owned or controlled by the Cuban government or a prohibited official of the Cuban government. Currently, no person subject to U.S. jurisdiction may lodge, pay for lodging or make any reservation for or on behalf of a third party to lodge at any of those properties. It is believed that these prohibitions will remain in place.

Importantly, the Biden Administration's actions on Jan. 14, 2025, do not affect the decades-old U.S. economic embargo imposed on Cuba in 1960 following the revolution led by Fidel Castro and the nationalization of properties belonging to U.S. citizens and corporations. The embargo includes a suite of laws and regulations that complicate financial transactions and the acquisition of goods and services by Cuba. Those sanctions will remain and can be lifted only by Congress.

Suspension of Property Claims

Title III of the Helms-Burton Act, also known as the Libertad Act, established a private right of action for U.S. nationals against non-U.S. entities that traffic in property confiscated by the Castro regime following the Cuban Revolution. This provision allows U.S. citizens and companies to seek damages from companies benefiting from such property seized by the Cuban government without compensation during the Cuban revolution.

President Biden has announced the issuance of a six-month waiver for Title III of the Libertad Act, which will temporarily suspend the ability of individuals to file lawsuits in U.S. courts regarding claims to potentially confiscated property in Cuba.

Since its enactment by President Bill Clinton in 1996, every U.S. president has exercised the option to suspend this provision until the suspension was lifted by President Trump in 2019.

Release of Political Prisoners

Following riots on July 11, 2021 – the largest since Castro's revolution in 1959 – Cuba faced significant criticism from rights groups, the U.S. and the European Union following the imprisonment of more than 1,000 protesters, many of whom were facing prison sentences of up to 30 years. The measures announced by President Biden on Jan. 14, 2025, were described as "unilateral" actions intended as a "gesture of good will" to support a deal mediated by the Catholic Church for the release of Cuban political prisoners, including those involved in the island-wide July 11, 2021, demonstrations.

Since at least 2023, Cuba has been in discussions with Vatican officials about potentially granting amnesty to these political prisoners. Historically, the Vatican has played a crucial role in negotiating the release of prisoners from Cuban jails and was instrumental in the 2015 renewal of diplomatic relations between Cuba and the U.S. under President Obama.

In January 2021, shortly before leaving office, President Trump placed Cuba back on the U.S. State Sponsor of Terrorism list, five years after President Obama had removed it, citing Cuba's alleged support for international terrorism by harboring U.S. fugitives and Colombian rebel leaders. Following President Biden's announcement to ease sanctions, Cuban President Miguel Diaz-Canel declared that his government would "gradually" release 553 prisoners, a decision made after discussions with the Catholic Church, led by Pope Francis. President Trump, set to take office next week, has the authority to reverse Biden's actions.

Impacts and Challenges

The potential impact of these policy changes remains uncertain and challenging to predict. Although these policy changes theoretically ease some sanctions and could facilitate certain international commerce for Cuba, they do not substantively repeal or eliminate many of the sanctions and embargoes imposed by the Helms-Burton Act (which require an act of Congress). Further, as President-Elect Trump prepares to assume the U.S. presidency on Jan. 20, 2025, he may reverse many, if not all, of the actions announced by President Biden.

During his prior administration, President Trump rolled back some President Obama-era initiatives that eased Cuban sanctions. By way of example, during his prior term, President Trump eliminated or restricted 1) authorizations for banks subject to U.S. jurisdiction to process pass-through or "U-turn" transactions facilitating third-country commerce, 2) certain types of remittances to Cuba and 3) certain types of travel by Americans to Cuba, including banning certain group tours and cruise ship stops.

President-Elect Trump has previously pledged to take a hard stance on Cuba and has nominated Sen. Marco Rubio (R-Fla.), the son of immigrants from Cuba and a vocal critic of the Cuban government, as U.S. Secretary of State. Sen. Rubio was personally involved in shaping some of the policies that were undone by President Biden  in particular, the sanctions against the Cuban military. With Sen. Rubio's anticipated confirmation, the ultimate effects of President Biden's policy actions are unclear.

Consequently, persons subject to U.S. jurisdiction (including U.S. financial institutions) and non-U.S. persons who rely on the U.S. financial system or U.S.-origin goods for international commerce should closely monitor developments associated with the Cuba sanctions regime, as they are expected to be highly dynamic during President Trump's term and could be substantively modified despite President Biden's actions during the last few days of his presidency.

Holland & Knight Cuba Action Team

Holland & Knight's Cuba Action Team has dealt with Cuba-related issues for more than 20 years. The Cuba Action Team includes a number of lawyers from our robust Latin America Practice, International Trade Practice and our Financial Services Practice. We have extensive experience assisting a wide range of U.S. and non-U.S. clients on Cuban trade embargo issues across diverse industries, including airlines, shipping lines, hotels, heavy equipment distributors, insurers, agricultural, and pharmaceutical companies and organizations. In addition, Holland & Knight has a Cuban licensed/trained lawyer.

For more information, please contact the authors.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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