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November 16, 2016

OFAC, BIS Implement More Cuba-Related Changes

On October 17, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) amended the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR), respectively, to further implement the new approach in U.S. policy toward Cuba announced by President Obama on December 7, 2014.  Below we provide a synopsis of OFAC’s and BIS’s major amendments.

OFAC

OFAC’s amendments include authorizations for certain transactions related to Cuban-origin pharmaceuticals and joint medical research; new authorizations for and the removal of certain restrictions on Cuba-related trade and commerce; an expansion of existing authorizations for grants and humanitarian-related services; and revisions that further facilitate authorized travel-related activities and civil aviation safety-related services.

Cuban-origin pharmaceuticals and joint medical research.  Persons subject to U.S. jurisdiction are now authorized to:

Cuba-related trade and commerce.  These amendments include:

Humanitarian-related transactions. OFAC’s amendments in this area include:

Travel-related activities.  These amendments include:

Civil aviation safety-related services.  OFAC added a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.
Additionally, OFAC narrowed the definitions of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.

OFAC’s final rule can be accessed here.


BIS

BIS’s amendments include a revision to License Exception AVS[4] to allow cargo aboard aircraft to transit Cuba when that cargo is destined for other destinations, an expansion of License Exception SCP[5] to facilitate direct sales to individuals in Cuba, and revisions to the lists of Cuban officials ineligible for certain license exceptions.

License Exception AVS (Aircraft, Vessels and Spacecraft)
BIS made cargo transiting Cuba via aircraft on temporary sojourn eligible for License Exception AVS even when the cargo is destined for destinations other than Cuba.  BIS made a similar authorization available for vessels earlier this year.  BIS also made a clarifying edit regarding this provision.

License Exception SCP (Support for the Cuban People)
BIS revised License Exception SCP to authorize exports and reexports of eligible items sold directly to eligible individuals in Cuba for their personal use (or their immediate family’s personal use).  To be eligible, items must be designated as EAR99 or controlled for anti-terrorism reasons only.  In addition, the purchasers and end-users must not be members of the Council of Ministers, flag officers of the Revolutionary Armed Forces, or members of the Politburo.

Cuban Officials
The Council of Ministers, flag officers of the Revolutionary Armed Forces, and members of the Politburo, as a result of the rule, are now listed as ineligible for License Exceptions GFT[6], CCD[7], and SCP.  BIS revised these lists to correspond to amendments made by OFAC to its definitions of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.

BIS’s final rule may be accessed here.

For specific questions, please contact us.

[1] Food and Drug Administration.
[2] OFAC added a note clarifying that this paragraph authorizes the importation into the U.S. of items from a third country for exportation to Cuba pursuant to a license or other BIS authorization.  OFAC also stated that this general license does not authorize a transaction between a U.S.-owned or –controlled firm in a third-country and Cuba for the exportation to Cuba of commodities produced in a country other than the U.S. or Cuba.
[3] OFAC stated that the term “infrastructure” here means “systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.”
[4] License Exception Aircraft, Vessels and Spacecraft (AVS).
[5] License Exception Support for the Cuban People (SCP).
[6] License Exception Gift Parcels and Humanitarian Donations (GFT).
[7] License Exception Consumer Communications Devices (CCD).