International Trade Law News

Published by Jacobson Burton Kelley PLLC

Today the Office of Foreign Assets Control (OFAC) published in the Federal Register an interim final rule amending the Cuban Assets Control Regulations, 31 C.F.R. part 515 (the "CACR"), to implement recommendations made by the Commission for Assistance to a Free Cuba, an interagency commission tasked with identifying ways to hasten Cuba's transition to democracy. The following is a summary of the changes to the CACR that will take effect on June 30, 2004:

A. Fully-hosted travel. The CACR has been amended to remove discussion of and references to fully-hosted travel, whereby all costs and fees are paid for by a third-party national) and the presumption that travelers to Cuba pay expenses for Cuba travel-related transactions. OFAC claims that this significant change in policy was made because it found that persons who claimed their travel was fully-hosted routinely engaged in prohibited money transactions (e.g., payment of entry and exit and docking fees). In addition, OFAC is now taking the position that even a person who accepts goods or services in Cuba without paying for them is in fact engaging in a prohibited dealing in property in which Cuba or a Cuban national has an interest. Therefore, OFAC is removing the language regarding fully-hosted travel from the CACR and is thereby eliminating any authorization of fully-hosted travel. The regulation also specifies that OFAC interprets the prohibition on dealing in property to include a prohibition on the receipt of goods or services in Cuba when those goods or services are provided free-of-charge, whether received as a gift from the Government of Cuba, a national of Cuba, or a third-country national, unless otherwise authorized by an OFAC general or specific license.

In the process of removing references to fully-hosted travel, OFAC is also removing the language stating that any person who travels to Cuba without OFAC authorization is presumed to have engaged in prohibited travel-related transactions there. Notwithstanding the removal of this language, OFAC may still argue, either within the Treasury Department civil penalties process or before a United States court, that the receipt of services or other dealings in property in which Cuba has an interest, such as a stay at a Cuban hotel or the purchase of food in Cuba, can be inferred from evidence of multi-day travel in Cuba.

B. Importation of Cuban merchandise. The CACR is amended to eliminate the general license authorizing licensed travelers to Cuba to purchase in Cuba and return to the United States with up to $100 worth of Cuban merchandise for personal consumption. The amended language now explains that no merchandise (except for informational materials) may be purchased or otherwise acquired in Cuba and then brought back to the United States.

C. Exportation of accompanied baggage. The CACR are amended to provide that the amount of baggage carried by an authorized traveler to Cuba is now limited to 44 pounds per traveler, unless a higher amount is authorized by OFAC or the Bureau of Industry and Security (BIS).

D. Travel to visit relatives in Cuba. The CACR are amended to make a number of changes to the rules regarding travel-related transactions incident to visiting relatives in Cuba. Prior to these amendments, a person with a Cuban national close relative in Cuba could engage in travel-related transactions incident to visiting that relative once every 12 months under a general license and more often pursuant to specific licenses if requested. There was no stated limit to the duration of the first visit, and the traveler could spend up to the State Department per diem (currently $167) for living expenses in Cuba plus any additional funds needed for transactions that were directly incident to visiting that relative.

The amendments to the CACR narrow the category of relatives who can be visited in Cuba. The definition of "close relative" is replaced by the term "member of a person's immediate family," which is defined to include a spouse, child, grandchild, parent, grandparent, or sibling of that person or that person's spouse, as well as any spouse, widow, or widower of any of the foregoing.

The once-per-twelve-months general license contained in the CACR is eliminated. In its place, new language is added that states that OFAC will issue specific licenses authorizing travel-related transactions incident to visits to members of a person's immediate family who are nationals of Cuba once per three-year period and for no more than 14 days. A person subject to U.S. jurisdiction who wishes to engage in travel-related transactions to visit a member of his or her immediate family who is a national of Cuba will need to request and receive specific permission from OFAC before engaging in those transactions. For those who emigrated to the United States from Cuba and have not since that time visited a family member in Cuba, the three-year period will be counted from the date they left Cuba. For all others, the three year period will be counted from the date they last left Cuba pursuant to the pre-existing family visit general license or, if they traveled under a family visit specific license, the date that license was issued. The language that authorized OFAC to issue specific licenses for additional visits, is eliminated. No additional visits will be authorized.

These amendments also reduce the amount of money travelers visiting members of their immediate family may spend for their living expenses in Cuba. The new limit, is $50 per day plus up to an additional $50 per trip, if needed, to pay for transportation-related expenses in Cuba that exceed the $50 per day limit.

E. Attendance at certain professional meetings in Cuba. The amendments to the CACR to clarify that the general license authorizing travel-related transactions incident to certain professional research in Cuba does not extend to transactions incident to attendance at professional meetings or conferences in Cuba. To the extent a professional researcher believes that attendance at a particular meeting or conference in Cuba is important to his or her research and the meeting or conference does not qualify under the general license, the researcher may request a specific license from OFAC.

F. Educational activities in Cuba. The CACR amendments provide that specific licenses are limited to undergraduate and graduate institutions (i.e., no secondary schools) and the duration of such licenses is shortened from two years to one year. Only students enrolled in the licensed institution may travel on that license; therefore, students may no longer travel to Cuba under the license of an educational institution other than their own, even if their own institution accepts the licensed institution's program for credit toward the student's degree. Employees who travel under the license must be full-time permanent employees of the licensed institution. Certain educational activities in Cuba may be no shorter than 10 weeks; others may be for a period of less than ten weeks. Previously licensed travel that no longer meets the new requirements may still go forward as long as the trips and all associated transactions are completed by August 15, 2004.

G. Participation in international sports federation competitions, clinics and workshops. OFAC is eliminating the general license for travel-related transactions incident to participation in amateur and semi-professional athletic competitions that take place in Cuba under the auspices of an international sports federation. In its place, OFAC is implementing a specific licensing policy under which OFAC will authorize those same activities on a case-by-case basis. OFAC also in amending the CACR to eliminate the policy of specifically licensing travel-related transactions incident to participation in clinics and workshops, whether sports-related or otherwise, in Cuba.

H. Quarterly remittances to nationals of Cuba. The general license authorizing quarterly $300 remittances sent by any US person 18 years of age or older to any household or national of Cuba is eliminated. The new general license authorizes such remittances only when they are sent to the remitter's immediate family. They cannot be remitted to certain Cuban government officials and members of the Cuban Communist party. The total amount of family remittances that an authorized traveler may carry to Cuba is reduced from $3,000 to $300.

I. NGO remittances to Cuba. The CACR are amended to clarify the specific licensing policy of authorizing remittances from nongovernmental organizations and individuals subject to U.S. jurisdiction to Cuban pro-democracy groups, independent civil society groups, and religious organizations as well as to individual members of such Cuban groups and organizations.

J. Remittance-related transactions by banks and other depository institutions. The general license authorizing depository institutions to act as forwarders for family and emigration remittances is eliminated. A specific authorization as a remittance forwarder is now required. Depository institutions are still authorized under general license to provide services related to other authorized financial institutions, such as transferring funds to Cuba covered by a specific license allowing overflight payments.