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PDF file of this
document - eighteen pages total:
http://www.walterlippmann.com/rbskl-memo-02-03-2011.pdf
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RABINOWITZ, BOUDIN, STANDARD, KRINSKY & LIEBERMAN, P.C.
ATTORNEYS AT LAW
45
BROADWAY, SUITE 1700
NEW YORK, NY 10006-3791
___
TELEPHONE (212) 254-1111
VICTOR RABINOWITZ
(1911-2007)
FACSIMILE (212) 674-4614
COUNSEL
LEONARD B. BOUDIN (1912-1989)
www.rbskl.com
LEONARD I WEINGLASS
MICHAEL KRINSKY DEBRA EVENSON
ERIC M. LIEBERMAN TERRY GROSS
DAVID B. GOLDSTEIN CRAIG KAPLAN
CHRISTOPHER J. KLATELL
____
LINDSEY FRANK
DANIEL S. REICH
MICHAEL
KRINSKY
212 254 1111 Ext. 102
mkrinsky@rbskl.com
February 3, 2011
Re: Amendments to the Cuban Assets Control
Regulations – January 28, 2011
At the request of the Christopher Reynolds Foundation,
we provide this preliminary analysis of the Obama Administration’s
new amendments to the U.S.’s embargo regulations, the Cuban Assets
Control Regulations, published in the Federal Register on
January 28, 2011.
The Obama Administration is working on potentially important
Guidelines to the amendments, which it hopes to issue within the
next two weeks or so. We will supplement this memorandum after the
Guidelines are issued.
The new amendments principally concern:
Educational activities in Cuba for U.S. college and university
students (I, p. 3 below)
Academic seminars, conferences and workshops in Cuba sponsored or
co-sponsored by U.S. colleges and universities (I, p. 7 below)
“People-to-people” educational exchanges in Cuba (II, p. 8 below);
Clinics and workshops in Cuba (III, p. 9 below);
Travel for religious activities in Cuba (IV, p. 10 below);
Remittances to religious organizations in Cuba (IV, p. 11 below);
Free-lance journalism projects in Cuba (V, p. 12 below);
Remittances to Cuban nationals in addition to family relatives (VI,
p. 12 below); and
Cuban nationals permanently resident in third-countries (VII, p. 13
below).
The January 28, 2011 amendments may be found on the
website of the U.S. Treasury Department’s Office of Foreign Assets
Control, which administers the Cuban Assets Control Regulations. Go
to
http://www.treas.gov/ofac.
OFAC’s Forthcoming “Guidelines”
The Obama Administration intends to issue Guidelines to the new
amendments within the next two weeks or so. The Guidelines are
likely to determine in important respects whether the amendments are
applied broadly or narrowly. This is particularly so for the
amendments concerning “people-to-people” educational exchanges,
clinics and workshops, and religious activities. Similarly, and
also critically, the Guidelines can establish either a streamlined
or a cumbersome application process.
In the following analysis, we flag with underlines some of
the more important issues that the Obama Administration may address
in formulating the Guidelines. We would expect that those in favor
of expanded travel to Cuba, and perhaps those opposed, will attempt
to engage the Administration over those issues, among others.
In addition to making substantive policy decisions on the scope of
several provisions, the Obama Administration will have to take into
account OFAC’s severely limited staffing. A bottleneck, severely
limiting the efficacy of the new amendments, would be created were
the Guidelines to establish an elaborate application process for the
issuance of specific licenses, or limit specific licenses in their
duration or frequency of use.
The United States Department of Treasury’s Office of Foreign Assets
Control (“OFAC”) administers the Cuban Assets Control Regulations (“CACR”),
with guidance from the State Department and, on occasion, from the
National Security Council and the White House as well. OFAC will
draft and issue the Guidelines.
Major Changes
The January 28 amendments include both new “general licenses” and
new provisions authorizing OFAC to issue “specific licenses.”
“General licenses” are provisions in the CACR that, in and of
themselves, authorize the described activity. “Specific licenses,”
in contrast, are issued by OFAC on application, and authorize the
applicant to engage in the activity described in the license.
Among the major changes made by the January 28 amendments are the
following:
Adoption of a general license authorizing U.S. colleges and
universities to have their students engage in educational activities
in Cuba, with no minimum length of the student’s stay in Cuba.
Previously, U.S. colleges and universities were required to apply
for specific licenses, and approval was given only for programs
involving a minimum stay in Cuba of ten weeks;
Addition of a provision authorizing OFAC to grant specific licenses
to U.S. colleges and universities to sponsor or co-sponsor academic
seminars, conferences and workshops in Cuba, and for their faculty
and students to participate in the licensed events;
Restoration of a provision authorizing OFAC to grant specific
licenses to organize and participate in “people-to-people”
educational exchanges in Cuba;
Restoration of a provision authorizing OFAC to grant specific
licenses to organize and participate in “clinics” and “workshops” in
Cuba;
Adoption of a general license authorizing “religious organizations”
and its members and staff to engage in “religious activities” in
Cuba;
Adoption of a general license authorizing remittances to “religious
organizations” in Cuba;
Adoption of a general license authorizing remittances up to $500
every three months to any Cuban “national,” and a supplemental
provision authorizing OFAC to issue specific licenses to remit
additional sums to support the development of private businesses.
U.S. College and University Educational Activities
General License for U.S. College and University Educational
Activities - § 515.565(a)
The six categories of educational activities authorized by general
license:
The amendments add a general license authorizing colleges and
universities, and their students and faculty, to carry on the same
six categories of educational activities that had been previously
authorized by specific licenses. The authorized activities are:
Structured educational programs in Cuba that are part of a course
offered for credit by an accredited U.S. undergraduate and graduate
degree-granting academic institution (hereafter “ U.S. college or
university”);
Academic research specifically related to Cuba for the purpose of
obtaining a graduate degree at a U.S. university, provided that the
research in Cuba will be accepted for credit toward that degree;
Formal courses of study at a Cuban academic institution, provided
that the formal course of study will be accepted for credit towards
the student’s undergraduate or graduate degree;
Teaching at a Cuban academic institution, provided the teacher is
regularly employed in a teaching capacity at a U.S. college or
university and will teach at the Cuban academic institution for a
period of no less than 10 weeks;
A Cuban “scholar” teaching or engaging in other scholarly activity
at a U.S. college or university, and payment of a stipend or salary
to the scholar. Note that a visa must still be granted by the State
Department;
The organization and preparation of the above five activities by
faculty or staff (including adjunct faculty and part-time staff) of
the U.S. college or university.
Structured Educational Programs in Cuba, and Formal Courses of
Study at Cuban Academic Institutions
Duration Requirement:
The amendments eliminate the 10-week minimum duration requirement
imposed by the Bush Administration on two categories of educational
activities: structured educational programs in Cuba that are part of
a course offered for credit by a U.S. college or university, and
formal courses of study at a Cuban academic institution.
The general license imposes no requirements at all as to the
length of stay in Cuba for these two categories.
Credit Requirement:
The general license requires that, with respect to these two
categories of educational activities, the student’s work in Cuba
must be accepted by the U.S. college or university at which the
student is enrolled for credit toward his or her undergraduate or
graduate degree.
The “credit” requirement may limit the ability of some U.S. academic
institutions, on account of their own constraints, to organize
short-term programs in Cuba under the general license. However,
OFAC has the authority to grant specific licenses authorizing a U.S.
college or university’s educational program even if credit is not
earned. It remains to be seen whether OFAC will exercise that
authority, and in what circumstances.
In contrast to the Obama Administration’s “credit” requirement,
the Clinton-era provision, until later amended, authorized colleges
and universities to organize structured educational programs in Cuba
for their students without any requirement that the student receive
credit; the program in Cuba only had to be part of a “course”
offered by the U.S. college or university.
A student’s participation in another U.S. college or university’s
program:
The general license permits a student enrolled at one U.S. college
or university to participate in educational activities in Cuba
through another U.S. college or university, provided that the
student will receive credit at his or her own college or
university. The Bush Administration prohibited this practice.
In the case of structured educational programs in Cuba, the general
license imposes a double credit requirement when a student at one
college or university is participating in a program sponsored by
another college or university. As noted, the student must receive
credit toward his or her degree at the student’s own institution.
In addition, the program must be part of a course offered at the
second institution for credit to its own students.
Graduate research:
In a highly questionable development, OFAC recently
construed specific licenses for graduate research to authorize only
research for the student’s masters or doctoral thesis. We see no
basis for this limitation in the text of the newly adopted general
license, and would consider OFAC’s imposition of such a limitation
on the general license to be legally untenable.
Adjunct faculty and part-time staff:
The general license allows a U.S. college or university to use
adjunct faculty or part-time staff to organize and run structured
educational programs in Cuba, and assist students enrolled in formal
courses of study at Cuban academic institutions. The Bush
Administration required that U.S. colleges and universities utilize
only “full-time permanent employees.”
U.S. faculty teaching at a Cuban academic institution:
The general license, like the specific licenses previously issued to
college and universities under the superseded provision, authorizes
faculty to teach at a Cuban academic institution, but
retains the limitations of the superseded provision: (a) that the
teacher be “regularly employed” in a teaching capacity at the
sponsoring U.S. college or university; and (b) that the teaching “be
no shorter than 10 weeks.”
The general license does not define “regularly employed.” As
confirmed by OFAC’s interpretation of that term in comparable
context (such as the general license for journalists), “regularly
employed” includes persons who are not full-time employees.
No dollar limitation on payment of fees and other transactions
directly incident to the educational activity:
The general license authorizes not only travel-related transactions
(for example, housing and meals) but also “additional transactions
that are directly incident” to the licensed activity, such as
payment of fees or tuition to the University of Havana. The
travel-related transactions are currently limited to $179 per day
but there is no limit on what can be spent on “additional
transactions directly incident” to the licensed activity.
Letter from sponsoring U.S. college or university:
To travel under the general license, the U.S. person must carry a
letter from the sponsoring U.S. college or university signed by the
person designated as the official responsible for overseeing the
institution’s Cuba travel program by relevant dean, academic
vice-president, provost or president of the institution.
In the instance of a student enrolled at one U.S. college or
university participating in an educational activity sponsored by
another college or university, it is the latter that provides the
required letter. The letter must state that the student will
receive credit at his or her own college or university.
Cuban scholars teaching or engaging in other scholarly activity
at U.S. colleges or universities:
The general license authorizes a Cuban “scholar,” not simply a
Cuban academic, to teach or engage in other “scholarly” activity at
U.S. colleges and universities, and to be paid stipends and
salaries. The CACR does not define “scholar” or “scholarly”
activity; both terms may reasonably be construed broadly.
Note that the general license does not obviate the need to obtain a
visa issued by the U.S. State Department.
Specific Licenses for Three Categories of Educational Activities
- § 515.565(b)(1)
In addition to the above general license, the new amendments
permit OFAC to issue specific licenses authorizing three of the
educational activities otherwise authorized by the general license
in instances when the general license does not apply for some
reason. The three activities are research for a graduate degree;
participation in a formal course of study at a Cuban academic
institution; and teaching at a Cuban academic institution.
OFAC could use this provision to license, for example: structured
educational programs run by a U.S. college or university even though
credit toward a degree is not offered; teaching at a Cuban
university for less than 10 weeks; or U.S. experts teaching at a
Cuban university even though they are not regularly employed by a
U.S. college or university.
In our view, there is good reason for the Guidelines to establish
clear criteria for its grant of specific licenses under this
provision, rather than make ad hoc and potentially arbitrary
or inconsistent licensing decisions on individual applications.
Specific Licenses for U.S. Academic Institutions to Sponsor
or Co-Sponsor Academic Seminars, Conferences and Workshops Related
to Cuba or Global Issues Involving Cuba - § 515.567(b)(3)
The amendments authorize OFAC to grant specific licenses to U.S.
colleges and universities (a) for “sponsorship or co-sponsorship” of
“academic seminars, conferences, and workshops” in Cuba “related to
Cuba or global issues involving Cuba,” and (b) attendance at the
sponsored or co-sponsored event by “faculty, staff, and students” of
the licensed U.S. institution. Those attending would be able to pay
a fee, directly or indirectly, to the Cuban co-sponsor or host of
the event.
Unless OFAC indicates to the contrary in the Guidelines or specific
licenses, it may be assumed that “sponsorship or co-sponsorship”
includes organizing and running the event, either with or without
the participation of a Cuban counterpart.
The Obama Administration’s adoption of a specific license regime for
these categories of activities rather a general license is fraught
with potential difficulties, including OFAC’s possible intrusion on
academic freedom and autonomy. Why would some U.S.-sponsored
academic events be licensed and others not, except for OFAC’s
approval or disapproval of their academic content or viewpoint? In
our view, OFAC would do well to establish objective criteria
unrelated to content and viewpoint.
Banking Transactions by U.S. Academic Institutions
The new amendments include an explanatory “Note” that accredited
U.S. colleges or universities are permitted to open and maintain
accounts at Cuban financial institutions, in order to have funds
available for the travel-related transactions and other transactions
directly incident to the licensed activities. For example, a U.S.
college can open an account at a Cuban bank sufficient to cover the
anticipated expenses of its students’ studying in Cuba.
In our view, this has always been authorized, but the
explanatory “Note” in the amendments is nonetheless helpful. As is
often done for other licensed transactions, funds could be
transferred to Cuban banks by wire transfer from U.S. banks through
third-country banks.
General License for Remittances to Students in Cuba Pursuant to
an Educational License – § 515.570(d)
The amendments add a general license that authorizes
remittances to close relatives who are U.S. college or university
students licensed to be in Cuba for educational activities. The
student is limited to $ 179 per day for travel-related expenses
(hotel or other accommodations and meals, for example); there is no
limitation on other expenditures directly incident to the licensed
activity, for example, payment of fees or tuition to the University
of Havana.
Specific Licenses for “People-to-People” Educational Exchanges –
§ 515.565(b)(2)
The new amendments authorize OFAC to issue specific licenses for
“educational exchanges” that “take place under the auspices of an
organization that sponsors and organizes such programs to promote
people-to-people contact.”
Businesses as well as not-for-profits and academic institutions may
qualify as an “organization that sponsors and organizes” programs to
promote people-to-people contact.
The provision is identical in its wording to the Clinton
Administration’s 1999 “people-to-people” provision. We do not know
yet whether the Obama Administration intends to utilize this
provision in the same expansive way that the Clinton Administration
used the 1999 provision; the amendments permit but do not require a
comparably robust approach. Much will
depend on the Guidelines.
When the identical provision
was in effect during the Clinton Administration, OFAC granted
numerous specific licenses that permitted a wide-range of businesses
and institutions to carry out successful programs in Cuba.
Among the many different types of organizations that operated
programs under “people-to-people” specific licenses were:
For-Profit Businesses
Alumni Associations
Museums
Professional Associations
Civic Associations
Cultural Institutions
Business Associations
Religious Institutions (for activities not deemed “religious
activities”)
Advocacy Organizations
Student Associations
Other Not-for-Profits
Groups organized on an ad hoc basis for purposes of traveling
to Cuba
Often, participation in their programs was not limited
to members but was offered more broadly.
Although “people-to-people” educational exchanges were robust under
the Clinton Administration, the Bush Administration moved to narrow
the exchanges through restrictive “Guidelines.” The Bush
Administration also moved to limit these exchanges by taking the
position that licensees could not organize programs in Cuba led by
others, or enter into certain other types of arrangements that OFAC
considered improper “lending” of their licenses. After sharply
curtailing “people-to-people” educational exchanges in these ways,
the Bush Administration finally eliminated this category of travel
altogether in March 2003.
It remains to be seen whether the Obama Administration will adopt
Guidelines that give “people-to-people” educational exchanges an
expansive reach or impose the crippling restrictions of the Bush
Administration. A copy of the Bush Administration’s June 2002
Guidelines are attached as a point of reference.
Unless removed by the Obama Administration, OFAC’s limitations on
licensed Travel Service Providers (“TSPs”) may constrict
“people-to-people” educational exchanges. TSPs are businesses that
are licensed by OFAC to provide services related to travel to Cuba.
Under OFAC’s current rules, OFAC will not issue “people-to-people”
specific licenses to TSPs. Rather, TSPs may only service
organizations or individuals that have themselves obtained
people-to-people licenses.
The specific licenses issued under this provision will grant
authority not only to engage in travel-related transactions (limited
to $179 per day) but also other transactions directly incident to
the licensed activity, for example, payment to a Cuban institution
or business for helping arrange the educational exchanges.
Specific Licenses for Public Performances, Clinics, Workshops,
Athletic and Other Competitions and Exhibits – § 515.567
Clinics and Workshops
The amendments restore OFAC’s authority to grant specific
licenses authorizing participation in a “clinic” or “workshop” in
Cuba, provided that that the clinic or workshop in Cuba is
“organized and run, at least in part, by the licensee.”
There was no limitation in the Clinton-era provision
that the clinic or workshop be “organized and run,” even in part, by
the U.S. licensee. That restriction was added by the Bush
Administration.
The event must “be open for attendance, and, in relevant situations,
participation, by the Cuban public.”
The provision is devoid of any indication as to what types of
“clinics” or “workshops” OFAC will license. It is possible that the
Obama Administration will use the Guidelines to provide broad
criteria and paradigms, but OFAC’s past Guidelines on “clinics” and
“workshops” left much to guesswork and ad hoc licensing
decisions.
Before the Bush Administration’s repeal of the predecessor
provision, OFAC licensed a wide-range of clinics and workshops.
Amateurs and enthusiasts, as well as professionals and students in
the field, often were able to participate. OFAC used the following
example to illustrate at least one aspect of its licensing policy:
OFAC would license “a group of ballet dancers wish[ing] to travel to
Cuba to hold workshops with the Cuban ballet where they will, using
hands-on techniques, exchange lessons on Cuban and American ballet
techniques.”
“Clinics” and “workshops” do not necessarily involve an exchange
between more or less equals. A “clinic” might involve, for example,
Cuban professional dancers instructing U.S. amateurs or enthusiasts
on Cuban forms of social dancing.
The specific licenses authorized by the provision will license not
only travel-related transactions (up to $179 per day) but “other
transactions directly incident” to the licensed activity. A typical
example of the latter would be payment of a fee to the Cuban
counterpart of the licensed U.S. entity for helping organize and run
the clinic or
workshop.
Profits
The prior provision (which authorized the grant of specific
licenses for participation in public performances, certain athletic
events and exhibitions) required that all “U.S. profits from the
event after costs [be] donated to an independent non-governmental
organization in Cuba or a U.S.-based charity, with the objective, to
the extent possible, of benefiting the Cuban people.” The new
provision (which covers clinics and workshops as well) expands the
permissible objectives to include “promoting people-to-people
contact.”
Athletic Competitions
The new provision does not change the existing provision authorizing
OFAC to issue specific licenses for participation under the auspices
of an international sports federation. The Clinton-era, 1999
regulations provided a general license for those activities.
Religious Activities
General License to Engage in Religious Activities – § 515.566(a)
The previous regulations authorized OFAC to issue specific
licenses to “religious organizations” to engage in “religious
activities” in Cuba. The new amendments replace this specific
license provision with a general license.
The general license applies not only to the religious
organization but to its “members and staff.” The religious
organization must provide a letter confirming that they are
traveling to engage in religious activities “under the auspices of
the organization.”
The general license authorizes both travel-related transactions
(with a limit of $179 per day) and other transactions that are
directly incident to religious activities in Cuba. The latter would
include, for example, U.S. persons providing services.
The general license does not cover financial or material donations.
However, financial donations may be authorized either by the new
general license for remittances to “religious organizations in
Cuba,” discussed below, or by specific license. Material donations
of U.S.-origin commodities must be authorized by the Commerce
Department; and material donations of third-country commodities must
be authorized by specific OFAC license.
The general license permitting “religious organizations” to
engage in “religious activities” essentially mirrors the previous
provision for the grant of specific licenses. OFAC generated
substantial controversy by how it defined “religious organizations”
and “religious activities” for purposes of that now superseded
provision. There is no legal impediment to OFAC agreeing that
“religious organizations” and “religious activities” have a broader
scope in the general license.
Under its Guidelines to the now superseded provision, OFAC
considered entities to be “religious organizations” only if (a)
they had an “established congregation served by an organized
ministry,” provided “regular religious services,” provided
“religious education of the young,” disseminated a formal religious
doctrine, and had a membership not associated with any other
denomination; or (b) the IRS had determined that they were
“churches, their integrated auxiliaries or conventions or
associations of churches.”
Those Guidelines defined the “religious activities” that a
“religious organization” might pursue under a specific license as
including, but not being limited to, attendance at religious
services or activities that contribute to the development of a Cuban
counterpart’s religious or institutional development such as:
ministerial training, education, or licensing; religious school
development; youth outreach; training in or the conducting of
marriage seminars; construction of places of worship or other
facilities for full-time use by a Cuban counterpart; production and
distribution of religious materials; assistance in holding religious
services; religious preaching or training; and training or
assistance in church administration.
General License for Remittances to “Religious Organizations” - §
515.570(c)
The amendments provide a general license for remittances
to “religious organizations” in Cuba in support of “religious
activities,” without any limitations as to amount or frequency.
The remittance may be made by any U.S. individual,
partnership, association, corporation, or other organization.
The same issues as to what will be considered
“religious organizations” and “religious activities” arise under
this general license as arise under the general license for
“religious organizations” to carry out “religious activities” in
Cuba.
Specific License for Religious Activities - § 515.566(b)
The amendments authorize OFAC to issue specific
licenses in its discretion authorizing “religious activities” not
authorized by the above two general licenses. For example, OFAC, in
its discretion, could license entities that do not qualify as
“religious organizations” within the meaning of the general licenses
to engage in religious activities in Cuba; or license financial
donations to Cuban entities that do not qualify as “religious
organizations” to support their “religious activities.”
Unless OFAC establishes broad and objective criteria in the
new Guidelines, there will be substantial difficulties,
constitutional and otherwise, in OFAC drawing distinctions in its
licensing decisions between different forms of “religious
organizations” and “religious activities.”
Banking Transactions by Religious Organizations
The new regulations include an explanatory “Note”
that religious organizations are permitted to open and maintain
accounts at Cuban financial institutions, in order to cover
transactions authorized by the general or specific licenses
discussed above.
In our view, this was always authorized, but the
explanatory “Note” is helpful. As is done for other licensed
transactions, funds could be transferred to Cuban banks by wire
transfer from U.S. banks through third-country banks.
Specific Licenses for Free-Lance Journalistic Activities - § 515.563
The CACR provides a general license authorizing travel for
journalistic activities by persons “regularly employed” as
journalists by news gathering organizations. The CACR also used to
authorize OFAC to issue specific licenses for travel to do “research
in Cuba for a free-lance article.” The amendments expand the scope
of the provision for specific licenses by modifying it to cover
“free-lance journalistic projects,” not simply “articles.” The
amendment should make it easier, for example, to obtain specific
licenses to engage in journalistic activities in media in addition
to print media, such as making a documentary film.
Remittances
General License for Remittances to Any Cuban “National” –
§ 515.570(b)
The amendments add a new general license that authorizes
remittances to Cuban “nationals.” The remitter may send funds to an
unlimited number of Cuban “nationals.” The total remittances to any
one Cuban “national” cannot exceed $500 in any consecutive
three-month period.
The potential recipients, Cuban “nationals,” are defined
by the CACR to mean not only individuals but any partnership,
association, corporation or other organization in Cuba. The only
exclusions are officials of the Cuban Government and members of the
Cuban Communist Party at a certain level.
The remitter sending funds to Cuban “nationals” can be
an individual, partnership, association, corporation or other
organization. The new amendments authorize remittances by
“persons,” which the CACR define to mean an individual and each of
these entities.
The general license states that remittances may be made
“to support the development of private businesses,” but do not
confine remittances to that or any other purpose.
The general license for remittances does not authorize
U.S. persons to make investments in or loans to Cuban businesses or
to become partners or participants in those businesses, or to enter
into agreements with the recipients that they will receive something
in return for the remittances at a future date (even on the
condition that the return will not be made until permitted by U.S.
law).
The new regulations do not make any changes to
the general license for family remittances adopted by the Obama
Administration in September 2009. That general license authorizes
remittances to “close relatives” in Cuba without any limitation as
to amount or frequency, and defines “close relatives” extremely
broadly to include any individual related by blood, marriage or
adoption who is no more than three generations removed from the
recipient or from a common ancestor with that person.
Specific Licenses for Remittances to “Non-Governmental Entities”
and Individuals to Support the Development of Private
Businesses – § 515.570(g)
The amendments supplement the general license for
remittances up to $500 every three months to “Cuban nationals” with
a provision authorizing OFAC to issue specific licenses permitting
remittances to “individuals or independent non-government entities
to support the development of private businesses,” including
specifically but not limited to “small farms.”
The provision does not define “independent non-government
entities.”
Under this provision, OFAC can issue specific licenses
that set whatever limits as to amount and frequency that OFAC
wishes, or without any limits.
Carrying General License Remittances – §
515.560(c)(4)(i)
The new amendments authorize persons authorized by
general or specific license to travel to Cuba to bring with them
remittances authorized by general licenses (except for the
general license for emigration purposes), but only in an aggregate
amount not to exceed $3,000 on any one trip. The CACR previously
provided this authorization for family remittances only.
Cuban Nationals Permanently Resident in Third-Countries – §
515.505
Prior to the amendments, Cuban nationals taking up
permanent residence in a third-country would have to apply to OFAC
to become unblocked nationals. Until that application was granted,
they would remain fully subject to the CACR, with the consequence
that persons subject to U.S. jurisdiction could not engage in
unlicensed transactions with them, and their property in the U.S.
remained blocked.
The amendments retain the requirement of applying for
and obtaining status as an unblocked national for the unblocking of
blocked property in the U.S. However, the amendments provide a
general license authorizing persons subject to U.S. jurisdiction to
engage in any other transaction with a Cuban national who is a
permanent resident in a third-country. To
do so, the U.S. person must obtain copies of at least two documents
indicating “permanent residence” issued by the third-country, “such
as a passport, voter registration card, permanent resident alien
card, or national identity card.”
Prohibition on TSPs Maintaining Offices in Cuba
OFAC prohibits TSPs – that is, businesses licensed by OFAC to
provide services related to travel to Cuba – from maintaining their
own offices in Cuba, or engaging Cuban businesses to act as agents.
This prohibition will necessarily limit the impact of Obama
Administration’s amendments, given what is required to service
travel of the nature and scope contemplated by the amendments.
Correspondent Banking Relations
The CACR prohibits U.S. and Cuban banks from establishing
correspondent banking relations. While the transfer of funds is
possible through third-country banks, the absence of correspondent
banking relations will drive up the costs and burden of making the
necessary transfers for travel and remittances authorized by the new
amendments, as it does for family travel and remittances.
Michael Krinsky
The foregoing does not constitute, and should not be
construed as, legal advice. Anyone seeking legal advice about the
subjects of this memorandum, or about the United States embargo
regulations generally, should consult an attorney.
APPENDIX
BUSH ADMINISTRATION’S JUNE 2002 GUIDELINES ON
PEOPLE-TO-PEOPLE EDUCATIONAL EXCHANGES
DEPARTMENT OF THE TREASURY
OFFICE OF FOREIGN ASSETS CONTROL
Guidelines for License Applications
Specific Licenses for Cuba Travel Transactions related to
Educational Exchanges not involving Academic Study pursuant to a
Degree Program.
The Cuban Assets Control Regulations, 31 C.F.R. Part 515 (the
“Regulations”), which are administered by the Office of Foreign Assets
Control (“OFAC”), prohibit all persons subject to U.S. jurisdiction from
dealing in property in which Cuba or a Cuban national has an interest.
This prohibition includes all Cuba travel-related transactions unless
such transactions are authorized in accordance with current licensing
policy or unless such transactions are otherwise exempt.
Specific licenses may not be granted when the purpose of travel to Cuba
is to engage in tourism or in prohibited business transactions. See §
515.560(g) of the Regulations. In order for a person to engage in
travel-related transactions with Cuba, he or she must demonstrate
eligibility under a licensable category set forth in § 515.560(a) of the
Regulations.
Under §§ 515.560(a)(5) and 515.565(b)(2) of the Regulations, OFAC may
make available on a case-by-case basis licenses authorizing Cuba
travel-related transactions incident to educational exchanges, not
involving academic study pursuant to a degree program, that take place
under the auspices of an organization that sponsors and organizes such
programs to promote people-to-people contact. Section 515.565(b)(2)
implements in part current U.S. policy toward Cuba, which promotes
two-way exchanges among academics, athletes, scientists, and others.
These exchanges are intended to provide for educational opportunities
not offered in the context of an accredited degree program while at the
same time promote contact with segments of Cuban society not associated
with the Cuban government.
Factors of Consideration
OFAC considers several specific factors in its review of applications
submitted under this category, including the following:
1. Whether the proposed activities are under the auspices of an
organization that sponsors and organizes its own international
educational exchanges to promote people-to-people contacts. Licenses
issued under this section are not transferable and do not authorize the
licensee to organize programs in Cuba led by others.
2. Whether the predominant portion of the proposed activities will be
with persons or entities that are not acting, directly or indirectly,
for or on behalf of the Government of Cuba or its parastatal industries
or enterprises.
3. Whether the predominant portion of the program and the ratio of Cuban
nationals to U.S. participants along with the forum for people-to-people
contact is reasonably suited to allow for direct and individual dialogue
between the parties.
4. Whether the proposed activities with the Cuban people are educational
in nature, such as participation along with the Cuban people in joint
activities (e.g., seminars, workshops or similar joint activities).
Information to Include in your Application
In order for us to evaluate whether your application meets the above
criteria, please provide the following information in letter format:
1. A description of the organization’s previous experience or
qualifications in planning and administering its own educational
exchange programs in other countries with the purpose, at least in part,
of promoting people-to-people dialogue. If available, provide sample
itineraries from prior programs.
2. A full-time itinerary, broken down by half-day or smaller intervals,
describing for each interval what the focus and nature of activities
will be under the educational exchange program. Also, please include
information concerning the ratio of Cuban nationals to U.S. participants
in each event.
3. A description of the selected topic(s) for the educational exchange.
4. A summary of the academic credentials and relevant experience of all
program guides or experts leading the educational exchange, by
providing, for example, copies of resumes or curriculum vitae. Also,
please indicate the nature of background material(s) and/or briefing(s)
to be provided to the group by the leader before departure to Cuba.
5. A procedure for informing participants that full-time participation
in the program is required and that failure to fully participate in the
program can lead to the revocation of the organization’s 515.565(b)(2)
license and enforcement action against the participant.
Applications shall be mailed to:
Director
Office of Foreign Assets Control
U.S. Department of the Treasury
2nd Floor Annex
1500 Pennsylvania Avenue, N.W.
Washington, DC 20220
Should you have any further questions about the application process,
please contact the Licensing Division at (202)
622-2480.
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