On September 21, 2015, both the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced significant reductions in the regulation of transactions between US individuals and entities and Cuban nationals.
OFAC Regulatory Changes
The revised regulations and interpretive guidance are effective immediately and demonstrate substantial progress in the normalization of relations between the United States and Cuba which were historically first announced earlier this year. Among the most significant changes to OFAC’s Cuban Assets Control Regulations include new permissions that:
- US entities may establish a physical presence, as well as Cuban bank accounts, to further authorized businesses related to mail, parcel and cargo services, news bureaus, telecommunications and internet-based services, educational services, religious organizations, and travel and carriers services.
- US entities may operate carrier services via vessels to and from Cuba, though travel to Cuba for tourism remains prohibited.
- US entities may provide goods and services to Cuban nationals who are located outside of Cuba.
- US entities may engage in legal services, emergency medical services, humanitarian, and diplomatic activities for the benefit of Cubans and Cuban nationals.
BIS Regulatory Changes
Similarly, the BIS has revised and clarified the Export Administration Regulations to facilitate the movement of authorized goods and people to and from Cuba by:
- Expanding the categories of vessels which are authorized to temporarily sojourn in Cuba to include cargo, transport and recreational vessels.
- Expanding the time aircraft can sojourn in Cuba.
- Permitting export and reexport of: software to improve the “free flow of information” to, from and around Cuba; items incidental to establishment of authorized businesses; and, on a temporary basis, certain proprietary “tools of the trade” necessary to establish and support authorized business ventures.
Although these substantial revisions to OFAC and BIS regulations indicate that the Obama administration is committed to rapid liberalization, many significant regulations remain.
With limited guidance on how these new regulations will be interpreted and implemented, any U.S. individual or entity considering entry into the Cuban market should seek specific advice as to whether their proposed venture complies with all current regulations before they agree to any transactions with Cuban nationals.