TOP 11 NEW Business Opportunities with Cuba as a Result of NEW OFAC and BIS Laws

In December, 2014, we updated you on the president’s historic announcement in regards to doing business in Cuba, and in January we updated you on both the Office of Foreign Assets Control (“OFAC”) amendments to the Cuban Assets Controls Regulations (“CACR”) and the amendments to the Export Administration Regulations (“EAR”) administered by the United States Department of Commerce. As of September 21, 2015, both OFAC and the BIS have amended their regulations again, and below details the top 11 changes as a result of the new laws.

We'll be discussing these new changes on October 8th, at our Export Compliance Seminar at the Miami Free Zone. Blog subscribers get to take advantage of the discount code! Email me at jdiaz@bplegal.com for it. You can RSVP here. 

The new changes, which can be found here and here, expand the scope of authorized business and travel by U.S. person and companies inside of Cuba. These changes were put into place to help facilitate engagement between the U.S. and Cuba.

Below we’ve providing you with a detailed summary of the top 11 changes:

I.      Travel

• Travelers who have been authorized now can travel by vessel from the United States and Cuba, as long as it stays as a closed loop with no outside countries within the loop. - §515.572
• Persons subject to U.S. jurisdiction providing authorized carrier services by vessel are also authorized to provide lodging for authorized travelers onboard during the period of time the vessel is traveling to, from, or within Cuba, including when docked in a port in Cuba. - §515.572
• The amended license exception for Aircraft, Vessels, and Spacecraft (AVS) authorizes temporary sojourns to Cuba of certain categories of vessels.  These vessels are: cargo vessels for hire for use in the transportation of items; passenger vessels for hire for use in the transportation of passengers and/or items; and authorized recreational vessels that are used in connection with travel. This temporary sojourns provides that an  aircraft on temporary sojourn to remain in Cuba for up to 7 consecutive days and authorizes vessels on temporary sojourn to remain in Cuba for up to 14 consecutive days. § 740.15
• OFAC will now allow close relatives to also to visit or accompany authorized travelers for additional educational activities, journalistic activity, professional research, and religious activities, as well as activities related to humanitarian projects and activities of private foundations or certain research or educational institutes. OFAC is also amending a restriction that requires a authorized traveler that is to be visited or accompanied in Cuba, to be there for more than 60 days if the traveler is located in Cuba pursuant to 515.565(a)(1)-(4) -  §515.561
• Those who travel to Cuba are allowed now to open and maintain bank accounts for authorized transactions while in Cuba. §515.560

II. Telecommunications & Internet-based Services

• ​Travelers who are subject to U.S. jurisdiction will now be allowed to establish a business presence in Cuba, including through joint ventures with Cuban entities, to provide certain telecommunications and internet-based services. This as well as, authorizing licensing agreements related to services authorized by sections 515.542(b) through (d) and section 515.578(a), and to market such services. - §515.542 and §515.578
• OFAC has authorized the importation into the U.S. Cuban-Origin mobile applications and the employment of Cuban national by persons subject to U.S. jurisdiction to develop mobile applications, as well as authorizing persons subject to U.S. jurisdiction to provide services related to all such items that were exported to Cuba. - §515.578
• The License Exception Consumer Communications Devices (CCD) will no longer be limited to sales or donations. Other types of transactions, such as leases and loans of eligible items for use by eligible end-users will also be included. - §515.578

III. Commercial and Financial Transactions

• ​OFAC expanded the existing authorization to allow all persons subject to U.S. jurisdiction to provide goods and services to Cuban national individuals located in a third country. In addition, OFAC is adding an authorization to allow banking institutions to open, maintain, and close bank accounts for such Cuban nationals. - §515.585
• Banks will be able to open/maintain accounts for Cuban individuals for use while the Cuban national is located outside of Cuba, and to close such accounts. - §515.571

IV. Physical Presence and Operations in Cuba

• Persons subject to U.S. jurisdiction who engage in the following authorized activities will be allowed to establish and maintain a physical presence, such as an office or other facility in Cuba - §515.573:
• News bureaus;
• Exporters of certain goods authorized for export or reexport to Cuba by Commerce and OFAC, such as agricultural products and materials for construction or renovation of privately-owned buildings;
• Entities providing mail or parcel transmission services or certain cargo transportation services; providers of telecommunications or internet-based services;
• Entities organizing or conducting educational activities;
• Religious organizations; and
• Providers of carrier and certain travel services.
• This authorization will extend to the employment of Cuban nationals and persons subject to U.S. jurisdiction in Cuba, and the opening/maintaining of bank accounts in Cuba.

V. Support for the Cuban People

• License Exception Support for the Cuban People (SCP) will authorize certain exports and reexports of items to Cuba to improve the free flow of information to, from, and among the Cuban people. This license exception will no longer be limited to sales or donations, and will include other types of transactions, such as leases and loans of eligible items. Authorized travelers departing the United States or a foreign country are now allowed to temporarily export or reexport authorized items to Cuba for eligible end-uses. - 15 C.F.R. §740.21
• Persons subject to U.S. jurisdiction may now establish, maintain, or operate a physical presence in Cuba. Any resulting payments associated with such a physical presence, such as lease payments, are permitted only to the extent authorized by § 515.573 of the Cuban Assets Control Regulations - 15 C.F.R. §740.21
• Amendments also authorize certain temporary (not to exceed one year) exports and reexports to Cuba of EAR99 items and items controlled on the CCL only for anti-terrorism reasons, such as certain commodities and software for use in software development; which now may be exported or reexported to eligible end-users in Cuba pursuant to License Exception SCP. - 15 C.F.R. §740.21
• Temporary exports and reexports to Cuba of additional categories of items, including certain tools of trade to install, service, replace, or repair items; and certain commodities and software for exhibition or demonstration. - 15 C.F.R. §740.21

VI. Remittances

• OFAC amended to remove the limitation on the donative remittances to Cuban nationals who are not prohibited officials of the Government of Cuba or prohibited members of the Cuban Communist Party. OFAC also is amending section 515.560(c)(4)(i) to remove the limitation on certain authorized remittances that authorized travelers may carry to Cuba, and the limits on authorized remittances that individuals may carry to Cuba also was removed entirely. - §515.570
• The unblocking and return of remittances that were previously blocked because they exceeded the then-applicable caps on periodic remittances, and of certain previously blocked funds transfers, will be issued a new general license in section 515.570(h) which authorizes the unblocking and return of such blocked remittances, provided they would be authorized under the current regulations. - §515.584
• A new general license allows remittance from Cuba or from certain Cuban nationals located in third countries to the United States, and financial institutions will be allowed to provide related services. §515.587
• Remittances to Cuban nationals in connection with the administration of estates will also now be allowed. - §515.522

VII. Legal Services

• Certain legal services to Cuba and Cuban nationals have been expanded to allow the receipt of payment for such services. There is a certain limit on payments from prohibited Cuban Government or Cuban Communist Party officials. -  §515.512
• Persons subject to U.S. jurisdiction to are now authorized to receive, and make payment for, certain legal services from Cuba or Cuban nationals, within certain conditions. -§515.588

VIII. Gift Imports

• The importation into the United States of merchandise from Cuba or Cuban-origin  merchandise from a third country intended as gifts is authorized, excluding alcohol and tobacco products, is now allowed to be sent to the United States. As long as the merchandise is not being sent or being carried by a traveler, the value of the merchandise is not more than $100, and the item is of a type and in quantities normally given as a gift. - §515.544

IX. Educational Activities

• Additional educational activities involving Cuba and Cuban nationals have been authorized by OFAC, including the provision of standardized testing services and internet-based courses, will be authorized. - §515.565
• The general license expansion also includes the ability for U.S. and Cuban universities to engage in academic exchanges and joint non-commercial academic research - §515.565

X. Air Ambulances and Emergency Medical Services

• OFAC has allowed U.S. medical and other essential personnel to provide services to individual travelers such as air ambulance and other related emergency medical services to travelers in Cuba who have been authorized by general license, and clarity as to the provision of nonscheduled emergency medical services to Cuban nationals in the United States being authorized will be provided. - §515.548

XI. Humanitarian Projects

• OFAC explicitly included in its amendment disaster relief and historical preservation as authorized humanitarian projects - §515.575