US GOVERNMENT IMPLEMENTS HISTORIC CHANGES TO CUBA SANCTIONS REGIME

On 17 December 2014, president Obama announced historic US diplomatic and economic policy changes towards Cuba. The policy changes are designed to further “engage and empower” the Cuban people and focus primarily on travel, financial services, importation of goods, telecommunications, consumer communications devices, insurance, remittances, third-country effects, small business growth and support of the reestablishment of diplomatic relations. On 16 January 2015, regulatory changes implementing the US policy changes became effective. Specifically, amendments were made to the Cuban Assets Control Regulations administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the export administration regulations (EAR) administered by the United States Department of Commerce’s Bureau of Industry and Security. This article provides an overview of the key changes in OFAC’s amended Cuban assets control regulations (New Cuban Regulations).

Changes to the Cuban assets control regulations

Telecommunications and internet-based services. The New Cuban Regulations authorise transactions incident to the provision of commercial telecommunications services linking third countries and Cuba and within Cuba. Specifically, a general licence now authorises transactions that are related to the establishment of facilities, including fibre-optic cable and satellite facilities, to provide telecommunications services. Telecommunications services may include data, telephone, internet connectivity, radio, television, news wire feeds and similar services.

Transactions relating to certain internet-based services are also authorised, including the exportation or re-exportation from the US, or by a US person to Cuba, of services incident to the exchange of communications over the internet, services such as instant messaging, social networking, sharing of photos and movies, web browsing, blogging and domain registration services.

Financial services. Under the New Cuban Regulations, depository institutions are now permitted to open correspondent accounts at Cuban financial institutions, enabling the processing of authorised transactions. However, the establishment of accounts in the US or with a person subject to US jurisdiction by, on behalf of, or for the benefit of, Cuba or a Cuban national remains prohibited.

In addition, the New Cuban Regulations permit expanded financing options for authorised exports to Cuba by changing the definition of the term “payment of cash in advance” to “payment before the transfer of title to, and control of” the authorised export.

Apr-Jun 2015 Issue

Gibson, Dunn & Crutcher LLP