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On March 16, 2016, the Office of Foreign Assets Control (OFAC) will publish in the Federal Register a final rule amending the Cuban Assets Control Regulations (31 C.F.R. part 515) to further implement elements of the policy announced by the President on December 17, 2014 to engage and empower the Cuban people. Among other things, these amendments further facilitate travel to Cuba for authorized purposes, expand the range of authorized financial transactions, and authorize additional business and physical presence in Cuba. These amendments also implement certain technical and conforming changes. The Bureau of Industry and Security (BIS), Department of Commerce is also taking additional coordinated actions with OFAC in support of the President’s Cuba policy.
OFAC is making additional amendments to the Regulations with respect to travel and related transactions, financial transactions, business and physical presence, and certain other activities, as set forth below:
Travel and Related Transactions
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Individual people-to-people educational travel. OFAC is amending section 515.565(b) to remove the requirement that people-to-people educational travel be conducted under the auspices of an organization that sponsors such exchanges.
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Payment of salaries. OFAC is amending section 515.571 to remove the limitation on the receipt of compensation in excess of amounts covering living expenses and the acquisition of goods for personal consumption by a Cuban national present in the United States in a nonimmigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government.
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Dealings in merchandise subject to section 515.204, including Cuban-origin goods, for personal use. OFAC is adding section 515.585(c) to authorize individuals who are persons subject to U.S. jurisdiction and who are located in a third country to engage in the purchase or acquisition of merchandise subject to the prohibitions in section 515.204, including Cuban-origin goods, for personal consumption while in a third country, and to receive or obtain services from Cuba or a Cuban national that are ordinarily incident to travel and maintenance within a third country.
Financial Transactions
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U-turn payments through the U.S. financial system. OFAC is amending section 515.584(d) to authorize U-turn transactions in which Cuba or a Cuban national has an interest to be conducted through the U.S. financial system.
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Processing of U.S. dollar monetary instruments. OFAC is adding new section 515.584(g) to authorize U.S. banking institutions to process U.S. dollar monetary instruments presented indirectly by Cuban financial institutions.
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Certain bank accounts on behalf of a Cuban national. OFAC is adding new section 515.584(h) to authorize banking institutions to open and maintain accounts solely in the name of a Cuban national located in Cuba for the purposes only of receiving payments in the United States in connection with transactions authorized pursuant to or exempt from the prohibitions of this part and remitting such payments to Cuba.
Business and Physical Presence
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OFAC is amending section 515.573 to authorize additional persons subject to U.S. jurisdiction to establish a business and physical presence in Cuba. This includes exporters of goods authorized for export or reexport to Cuba by section 515.533 or section 515.559 or that are otherwise exempt; entities providing mail or parcel transmission services authorized by section 515.542(a) or providing cargo transportation services in connection with trade involving Cuba authorized by or exempt from the prohibitions of this part; and providers of travel and carrier services authorized by section 515.572.
- OFAC is clarifying that the business and physical presence authorization for providers of internet-based services extends to persons engaged in transactions authorized by section 515.578(e). OFAC is removing the prior provisions authorizing business presence that were located in sections 515.542 and 515.578 and consolidating these authorizations in section 515.573.
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Physical presence. OFAC is now expanding the authorization to establish a physical presence such as an office or other facility, in Cuba, to facilitate authorized transactions, to include the following additional categories of persons subject to U.S. jurisdiction: entities engaging in non-commercial activities authorized by section 515.574 (Support for the Cuban People); entities engaging in humanitarian projects set forth in section 515.575(b) (Humanitarian projects); and private foundations or research or educational institutes engaging in transactions authorized by section 515.576.
- OFAC is also adding a note to clarify that the activities that may be carried out by exporters of items exported or reexported pursuant to authorization by the Department of Commerce or OFAC, or that are otherwise exempt, at a physical presence authorized by this section include the assembly of such items.
Other Transactions
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Grants and awards. OFAC is adding a new provision in section 515.565 to authorize the provision of educational grants, scholarships, or awards to a Cuban national or in which Cuba or a Cuban national otherwise has an interest.
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Telecommunications and internet-related services. OFAC is amending section 515.578 to allow the importation of Cuban-origin software.
OFAC is also making several technical and conforming edits. The amendments are effective on publication. OFAC also published a number of new and updated Frequently Asked Questions pertaining to this regulatory amendment and a Fact Sheet summarizing the changes.
Please check our Sanctions Blog for any updates or additional information.
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