U.S Sanctions regime- Cuba
- Date: 02/10/2015
- Source: Leigh Hannson- Reed Smith
Despite the recent amendments to the U.S. Sanctions regime concerning Cuba, the prohibitions remain largely in place. However, there has been some change to the 180-day rule which are relevant to the shipping sector and should be noted.
Scope of application
The U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) administers a Cuba sanctions program under the Cuban Assets Control Regulations ( “CACR” ) which prohibits U.S. persons from directly or indirectly exporting or re-exporting any goods, technology or service to or from Cuba. U.S. Persons are prohibited from engaging in transactions with Cuba and Cuban nationals and any transactions involving property in which Cuba or a Cuban national has an interest. “Property” and “property interest” include contracts of any nature whatsoever and services and OFAC specifically prohibits evasive behavior that attempts to violate the provisions. The sanctions apply to:
(1) U.S. citizens or permanent resident aliens, wherever located (e.g., a U.S. green card holder living and working in Europe)
(2) entities, including their foreign branches, organized under the laws of the United States or any jurisdiction within the United States
(3) any person or entity in the United States (e.g., a foreign person in Washington, D.C.).
(4) all foreign subsidiaries of U.S. companies.
On January 16, 2015, OFAC’s regulations were amended to implement a new U.S. policy towards Cuba. These changes, inter alia, eased restrictions on travel to Cuba for certain purposes, modified a general license authorizing personal remittances to Cuba, allowed U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, authorized certain transactions with Cuban nationals located outside of Cuba, and allowed a number of other activities related to telecommunications, financial services, trade, and shipping. On September 21, 2015 new amendments that further relax restrictions on Cuba took effect. Broadly, the new September 2015 amendments work to facilitate already authorized activities, expand the scope of certain general licenses, and further remove restrictions on remittances.
However, unless a general license has been obtained or an exception applies, the prohibition on dealing with Cuban interests is still in place.
Amendments to the 180-day Rule
Significant to shipping, certain amendments have been made to the 180-day rule which prohibits a ship from calling into a U.S. port for 180 days after departing from a port of place in Cuba.
Under the current regulations, no vessel that enters a port or place in Cuba to engage in the trade of goods or the purchase or provision of services, may enter a U.S. port for the purpose of loading or unloading freight for a period of 180 days from the date the vessel departed from a port or place in Cuba. This prohibition may now be waived if the following conditions are met.:
- A vessel is engaging in trade with Cuba and the exportation from the United States to Cuba or re-exportations of 100% U.S.-origin items to Cuba, or negotiation of executory contracts is authorized by a license from the Department of Commerce’s Bureau of Industry and Security.
- A vessel is engaging in trade authorized by a general or specific license for certain exports and import transactions by U.S.-owned or -controlled foreign firms.
- A vessel is engaging in trade that is exempted by the regulations, such as in the export of information or information materials, or the donation of food.
- A vessel that is engaging or has engaged in the exportation or re-exportation to Cuba from a third country of agricultural commodities, medicine, or medical devices that would be designated as EAR99 under the Export Administration Regulations if they were located in the United States.
- A foreign vessel that has entered a port or place in Cuba while carrying students, faculty, and staff who are authorized to travel to Cuba pursuant to a general license for certain educational activities.
- A foreign vessel that is carrying or has carried persons between the United States and Cuba or within Cuba, but only if such vessel is authorized to do so because the underlying travel of the persons is authorized by the regulations (e.g., vessels are now authorized under a general license to provide travel-related or carrier-related services between the United States and Cuba or within Cuba, of persons, baggage and cargo, in connection with travel-related transactions authorized by the regulations). Please note that carriage to or from Cuba of any item subject to the Export Administration Regulations (15 CFR part 730 et seq.) may also require separate authorization from the Department of Commerce.
- A foreign vessel that is used solely for personal travel (and not transporting passengers), but only if there is also a license or other authorization issued by the Department of Commerce for the exportation or re-exportation of the vessel itself to Cuba.
For all other vessels, the 180 day rule remains in effect. For authorized shipments from the U.S. to Cuba, the regulations have been modified to change payment requirements from cash before shipment, to cash before transfer of title to the goods. This change means that payment need not be made before goods are shipped to Cuba, but must be made before the goods are discharged in Cuba.
We are grateful to Leigh Hannson of Reed Smith for this update.
For further information, visit their website here:
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