Changes to unwind will not take effect until new regulations are issued.
On June 16, US President Donald Trump announced his decision to revoke some—but not all—of the relaxations in Cuba sanctions initiated under former President Barack Obama. The new administration’s changes will not take effect until the US Department of Commerce and Department of the Treasury’s Office of Foreign Assets Control (OFAC) issue new regulations and guidance—changes that may be expected “in the coming months.”
In January 2015, the US government—through amendments to the Commerce Department’s Export Administration Regulations and OFAC—began to liberalize US trade restrictions with Cuba in order to carry out President Obama’s December 17, 2014 declaration of a new US-Cuba policy. The new rules—issued in separate waves in 2015 and 2016—left the comprehensive US embargo against Cuba largely in effect but liberalized certain licensed or authorized shipments.
For its part, the Cuban government reacted slowly in revising its own policies, laws, and regulations to fully accept and implement the limited relaxation that the US rules authorized. Moreover, from a political standpoint, Cuba’s government remained generally unchanged—limiting any movement toward a more open and democratic society that the relaxation of sanctions in part sought to foster.
Within President Trump’s “National Security Presidential Memorandum on Strengthening the Policy of the United States Towards Cuba” (hereinafter, the “Policy”), two key rollbacks may affect the manner in which individuals and organizations proceed:
The Policy states that the United States will “ensure adherence to the statutory ban on tourism to Cuba.”
To better comply with the statutory ban on tourism to Cuba, the Policy requires that the amended regulations for people-to-people travel be based on legitimate educational purposes. All educational travel must be under the auspices of an organization subject to the jurisdiction of the United States, and all such travelers must be accompanied by a representative of the sponsoring organization during the time spent in Cuba. In other words, any US traveler’s individual, self-directed, people-to-people Cuban sojourn that is not part of an authorized organization’s package tour, full-time, approved agenda will be prohibited when the new regulations are issued. Only group-organized, people-to-people travel for educational purposes will continue to be authorized. Other Obama-era OFAC general licenses for travel to Cuba appear to remain in place under the Policy, such as travel for religious activities, amateur sports events, and journalistic activities.
The Policy mandates that those traveling must engage in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence. Travelers must keep full and accurate records of all transactions related to any authorized travel, and such records must be available for OFAC examination for a five-year period following the conclusion of travel. The Policy also directs OFAC to “regularly audit travel to Cuba to ensure that travelers are complying with the relevant statutes and regulations.”
The forthcoming regulations will be prospective and thus should not affect existing contracts and licenses, although OFAC retains the discretion to determine whether specific travel or activities should be limited or otherwise affected by the regulatory changes.
The Policy directs that the new regulations will prohibit direct financial transactions with entities or sub-entities that are under the control of, or act for or on the behalf of, the Cuban military, intelligence, or security apparatus or personnel thereof. This includes Grupo de Administracion Empresarial S.A. (GAESA), its affiliates, subsidiaries, and successors.
The US Department of State will be publishing a list of entities with which direct transactions generally will be banned as a result of the Policy. GAESA reportedly has a wide-ranging reach that extends into many facets of the Cuban economy, and thus this provision is likely to require more nuanced licensing and compliance assessments and may impose a more onerous burden on US persons considering entering into otherwise-allowable transactions with Cuba.
As with most OFAC-directed policies, the new regulations are expected to carve out certain exceptions, and the new Cuba policy will not prohibit certain transactions involving the Cuban military, intelligence, or security apparatus or personnel thereof, including such transactions that
The United States will continue its current diplomatic relations with Cuba.
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