January 31, 2023

Volume XIII, Number 31


January 30, 2023

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Winners in the New Cuban Sanctions Program: Telecommunication and Internet Service Providers, Travelers, and Attorneys

In late September, the U.S. Department of the Treasury and U.S. Department of Commerce amended the regulations that form the Cuban embargo. These revisions further support the policy shift President Obama announced in December 2014. This new policy seeks to increase the free-flow of information to and within Cuba, facilitate people-to-people travel, and empower the nascent Cuban private sector. The business community influenced the September amendments through its dialogue with the Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS). Although additional relaxation of the Cuban embargo may not be possible without Congressional action[1], U.S. businesses should continue to seek specific licenses when their activity furthers the new Cuba policy, but does not fall within the general licenses.

Physical Presence in Cuba

The most significant change in the new Cuba regulations is the authorization for the following businesses and organizations to establish and maintain a  presence in Cuba to conduct ongoing operations:

  1. News bureaus;

  2. Exporters of certain goods authorized for export or reexport by Commerce and OFAC to Cuba;

  3. Mail and parcel transmission, and cargo transportation service providers;

  4. Telecommunication and internet-based services providers;

  5. Organizers and providers of certain educational activities;

  6. Religious organizations; and

  7. Carrier and certain travel service providers. (31 CFR 515.573).

The second category of permitted physical presence facilitates the U.S. Commerce Department’s Support for the Cuban People license exception, which authorizes the export of EAR99[2] building materials, equipment, tools, supplies and instruments for use by the private sector in Cuba. (15 CFR 740.21(b)). Although this license exception seems quite broad, it does not permit partnership with the Cuban government, as its purpose is the promotion of independent economic activity.

Telecommunication[3] and internet-based service[4] providers can not only maintain an office, warehouse, or retail outlet in Cuba, but can even have business relationships with any Cuban individual or entity to establish and maintain their business presence in Cuba. (31 CFR 515.542(f) and 578(d)). The other authorized businesses and organizations will undoubtedly face significant challenges in entering the Cuban market without the ability to partner with the Cuban government. It is therefore foreseeable that this authorization may be extended to the other categories.

It is important to note that while business relationships, such as joint ventures, may be formed between telecommunication and internet-based service providers and the Cuban government, their services to officials of the Cuban government or prohibited members of the Communist Party remain restricted. Telecommunication services cannot be provided those individuals, while Internet-based services must be limited to those that are widely available and at no cost to the user.  Additionally, OFAC requires semiannual reports reflecting all payments made to Cuba or a third country related to authorized telecommunications services. (§542(g)).

Authorized Travel

The September revisions expand the 12 categories of travel authorized pursuant to general licenses in the January amendments to the embargo. The categories of authorized travel are as follows:

  1. Family visits (§561)

  2. Official business of the U.S. government, foreign governments, and certain intergovernmental organizations (§562)

  3. Journalistic activities (§563)

  4. Professional research and professional meetings (§564)

  5. Educational activities (§565)

  6. Religious activities (§566)

  7. Public performances, clinics, workshops, athletic and other competitions, and exhibitions (§567)

  8. Support for the Cuban People (§574)

  9. Humanitarian projects (§575)

  10. Activities of private foundations or research or educational institutes (§576)

  11. Exportation, importation, or transmission of information or informational materials (§545)

  12. Certain export transactions that may be considered for authorization under existing Department of Commerce regulations and guidelines with respect to Cuba or engaged in by U.S.—owned or –controlled foreign firms (§§533 and 559)

Following the September revisions, there are no longer dollar limits for authorized remittances that  U.S. travelers may carry, and travelers may open, maintain, and close accounts in Cuban banks for the purpose of accessing funds in Cuba for authorized transactions. (§560).

To further facilitate authorized funds transfers, U.S. depository institutions are now permitted to establish and maintain correspondent accounts at Cuban financial institutions. (§584(a)).  The September revisions also provide a new general license that authorizes remittances from Cuba or Cuban nationals to the United States. (§587).

U.S. and Cuban Legal Services

Under the new Cuban regulations, U.S. attorneys are generally authorized to receive payments for the provision of authorized legal services to Cuba or a Cuban national, other than prohibited officials of the Government of Cuba or the Cuban Communist Party.  Attorneys are authorized, however, to receive payments from outside the United States for the provision of authorized legal services to or on behalf of those individuals. (§512(e)). U.S. attorneys  who receive payments for authorized legal services  must submit annual reports no later than 30 days following the end of the calendar year during which the payments were received providing certain information. (§512(e)(2)).

Additionally, a new general license permits “persons subject to the jurisdiction of the United States” to receive and make payments for legal advice and counseling on the requirements of and compliance with the laws of Cuba or any jurisdiction within Cuba, provided that such advice and counseling relates to authorized transactions. Other legal services from Cuban attorneys require the issuance of a specific license. (§588).

[1] The Trading with the Enemy Act (TWEA) permits the Executive Branch to amend and revise the Cuban Regulations, but the embargo cannot be lifted absent legislation or a submission by the President to Congress that a transition government is in power. “Upon submitting a determination to the appropriate congressional committees … that a transition government in Cuba is in power, the President, after consultation with Congress, is authorized to take steps to suspend the economic embargo of Cuba…” (Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (“Helms-Burton Act”), Section 204).

[2] Items that are subject to the jurisdiction of the Export Administration Regulations (EAR) but are not on the Commerce Control List (CCL), are designated EAR99.

[3] “Telecommunications services” includes data, telephone, telegraph, internet connectivity, radio, television, news wire feeds, and similar services, regardless of the medium of transmission, including transmissions by satellite. (§542(h)).

[4] “Internet-based services” includes instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, blogging, web hosting provided that it is not for the promotion of tourism, and domain name registration. (§578(a)(1)).

Copyright Holland & Hart LLP 1995-2023.National Law Review, Volume V, Number 279

About this Author

Jeremy Paner, Economic, Trade Sanctions Attorney, HOlland Hart Law Firm
Of Counsel

Mr. Paner is Of Counsel at Holland & Hart's Washington, DC office. His practice focuses on economic and trade sanctions compliance issues, in addition to general white collar criminal and regulatory investigations. Mr. Paner leverages his sophisticated governmental experience to deliver valuable risk analysis and compliance and avoidance advice to private clients.

Prior to joining Holland & Hart, Mr. Paner was the New York State Department of Financial Services appointed independent economic sanctions monitor of a major international...