Cuba_Travel – Duane Morris on Cuba, Puerto Rico & the Caribbean

March 15, 2016March 16, 2016 by Jose A. Aquino

U.S. Relaxes Cuba Sanctions Ahead of President Obama’s Historic Trip to Havana

Days before President Obama makes a historic trip to Havana, the Department of the Treasury and the Department of Commerce announced a further loosening of restrictions on travel and trade with Cuba. The changes make it easier for Americans to travel to Cuba and facilitate the use of U.S. dollars in Cuban financial transactions.

Americans can now take “people-to-people” trips to Cuba on their own instead of through group tours. The new measures allow Americans to legally travel to Cuba by simply filling out a form asserting that the purpose of their travel is for educational purposes. The expanded allowable travel together with direct commercial fights that are to begin later this year will greatly increase the number of Americans visiting the island. The Obama administration hopes that the increased flow of visitors with U.S. dollars will be the catalyst that leads to the opening of the Cuban economy.

The Obama administration also loosened rules on the Cuban government’s use of the U.S. dollar. The new rules allow U.S. banks to process Cuban transactions that pass through the U.S. banking system. Cuban nationals in the United States will now be able to earn a salary or other recompense and be permitted to open accounts in American banks.

Treasury Secretary Jacob J. Lew, said in a statement: “Today’s steps build on the actions of the last 15 months as we continue to break down economic barriers, empower the Cuban people and advance their financial freedoms, and chart a new course in U.S.-Cuba relations.” Secretary Lew added: “Today we are building on this progress by facilitating travel for additional Americans looking to engage with Cubans; allowing Cuban citizens to earn a salary in the United States; and expanding access to the U.S. financial system, as well as trade and commercial opportunities.”

The move was also praised by Commerce Secretary Penny Pritzker: “Today’s amendments build upon President Obama’s historic actions to improve our country’s relationship with Cuba and its people. These steps not only expand opportunities for economic engagement between the Cuban people and the American business community, but will also improve the lives of millions of Cuba’s citizens.”

The Department of Commerce summarized the regulations as follows:

“Travel and Related Transactions–

People-to-people educational travel. Individuals will be authorized to travel to Cuba for individual people-to-people educational travel, provided that the traveler engages in a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities and that will result in a meaningful interaction between the traveler and individuals in Cuba. Previously, the general license authorizing educational travel required such trips to take place under the auspices of an organization that was subject to U.S. jurisdiction and required all travelers to be accompanied by a representative of the sponsoring organization. This change is intended to make authorized educational travel to Cuba more accessible and less expensive for U.S. citizens, and will increase opportunities for direct engagement between Cubans and Americans. Persons relying upon this authorization must retain records related to the authorized travel transactions, including records demonstrating a full-time schedule of authorized activities. In the case of an individual traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, the individual may rely on the entity sponsoring the travel to satisfy those recordkeeping requirements.
Payment of salaries. Cuban nationals in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization will be authorized to earn a salary or compensation, consistent with the terms of the particular visa, provided that the recipient is not subject to any special tax assessments in Cuba. U.S. companies will be authorized to engage in transactions related to the sponsorship or hiring of Cuban nationals to work or perform in the United States similar to nationals from other countries, provided that no additional payments are made to the Cuban government in connection with such sponsorship or hiring. For example, Cuban athletes, artists, performers, and others who obtain the requisite visas will be able to travel to the United States and earn salaries and stipends in excess of basic living expenses. Transactions in connection with the filing of an application for non-immigrant travel authorizations will also be authorized.
Cuban-origin merchandise. OFAC will authorize certain dealings in Cuban-origin merchandise by individuals 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. This authorization will allow, for example, Americans traveling in Europe to purchase and consume Cuban-origin alcohol and tobacco products while abroad similar to the travel exemptions in other sanctions programs.

Banking and financial services –

U-turn payments through the U.S. financial system. U.S. banking institutions will be authorized to process U-turn transactions in which Cuba or a Cuban national has an interest. This provision will authorize funds transfers from a bank outside the United States that pass through one or more U.S. financial institutions before being transferred to a bank outside the United States, where neither the originator nor the beneficiary is a person subject to U.S. jurisdiction.
Processing of U.S. dollar monetary instruments. U.S. banking institutions will be authorized to process U.S. dollar monetary instruments, including cash and travelers’ checks, presented indirectly by Cuban financial institutions. Correspondent accounts at third-country financial institutions used for such transactions may be denominated in U.S. dollars.
U.S. bank accounts for Cuban nationals. U.S. banking institutions will be authorized to open and maintain bank accounts in the United States for Cuban nationals in Cuba to receive payments in the United States for authorized or exempt transactions and to remit such payments back to Cuba.

Trade and commerce –

Physical and business presence. OFAC will expand the existing authorization for “physical presence” (such as an office, retail outlet, or warehouse) to include entities that engage in authorized humanitarian projects, entities that engage in authorized non-commercial activities intended to provide support for the Cuban people, and private foundations or research or educational institutes engaging in certain authorized activities pursuant to sections 515.575, 515.574, and 515.576 of the CACR, respectively. OFAC will also expand the existing authorization for “business presence” (such as a joint venture) to include exporters of goods that are authorized for export or re-export to Cuba or that are exempt, entities providing mail or parcel transmission services or cargo transportation services, and providers of carrier and travel services to facilitate authorized transactions. The revised regulations will also clarify that the physical and business presence authorizations permit exporters and re-exporters of authorized or exempt goods to assemble such goods in Cuba. BIS will make conforming changes to the EAR to generally authorize exports and re-exports of eligible items to establish and maintain a physical or business presence that is authorized by OFAC.
Importation of software. The CACR currently authorizes the importation of Cuban-origin mobile applications. OFAC will expand this authorization to allow the importation of Cuban-origin software.
Shipping. BIS will generally authorize vessels to transport authorized cargo from the United States to Cuba and then sail to other countries with any remaining cargo that was onloaded in the United States.
Cuban private sector. BIS will adopt a licensing policy of case-by-case review for exports and re-exports of items that would enable or facilitate exports from Cuba of items produced by the Cuban private sector.

Grants and awards –

OFAC will authorize the provision of educational grants and awards, and clarify that an existing authorization applies to the provision of grants and awards for the humanitarian projects authorized in OFAC’s regulations. This step will further enable U.S. support for educational projects in Cuba and U.S. participation in philanthropic efforts.”

The Department of Treasury regulations, 31 CFR 515, are available here. The Department of Commerce regulations, 15 CFR 730-774, are available here.

For additional background, please refer to a recent Duane Morris alert “OFAC and BIS Publish Comprehensive Modifications Related to U.S. Policy Toward Cuba,” written by Duane Morris special counsel Brian Goldstein.

Jose A. Aquino (@JoseAquinoEsq on Twitter) is a special counsel in the New York office of Duane Morris LLP, and a member of the Duane Morris Cuba Business Group. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.

July 1, 2015July 8, 2015 by Jose A. Aquino

U.S. and Cuba To Announce Embassy Openings

President Barack Obama is expected to announce this morning that the United States and Cuba have reached an agreement to re-establish formal diplomatic relations and reopen embassies in each other’s capitals. President Obama proclaimed in December that he wanted to resume full diplomatic relations with Cuba and, after six months of negotiations, the two countries have worked out details of the new embassies. For the first time in over fifty years the Cuban flag will fly over its embassy in Washington and the U.S. flag will likewise hover over Havana.

The former U.S. embassy in Havana, now known as the U.S. Interests Section, will be reconverted into a fully operating embassy. The seven-story U.S. Embassy building on the Havana waterfront was constructed in 1953. The U.S. closed its embassy when then President Dwight D. Eisenhower broke off diplomatic relations with Cuba in January 1961. The former embassy building opened as the U.S. Interests Section in 1977 under President Jimmy Carter when he tried to re-establish diplomatic relations with Cuba. The State Department estimates that it needs $6.6 million to renovate the building to make it an operating embassy.

Secretary of State John Kerry is expected to travel to Cuba in July to oversee the embassy’s reopening. President Obama is also expected to travel to Cuba before leaving office in January 2017.

However, before it can reopen, the State Department must notify Congress of its intent to reopen the embassy in Havana. Congress then has 15 days to review the notification before the U.S. can open the embassy. Although certain factions in both houses of Congress continue to oppose widening ties with Cuba, there is unlikely to be a serious challenge to the reopening of the U.S. embassy in Havana.

Jose A. Aquino (@JoseAquinoEsq on Twitter) is a special counsel in the New York office of Duane Morris LLP, and a member of the Duane Morris Cuba Business Group. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.

February 2, 2015June 4, 2015 by Jose A. Aquino

Bill Introduced In Senate To End Travel Restrictions To Cuba

On January 29, 2015, a coalition of four Republican and four Democrat senators introduced legislation to restore freedom to travel to Cuba.[1] While President Obama has announced normalization of some relations between the two countries and relaxed travel restrictions to Cuba such that Americans traveling to Cuba no longer have to obtain specific licenses or get permission from the government, Americans are required to certify that their trip falls under one of the twelve categories of permitted travel.[2] Congressional action is necessary to permanently lift all restrictions on travel to the island nation. Bipartisan bill, S. 299, the Freedom to Travel to Cuba Act of 2015, would end restrictions in laws enacted in 1996 and 2000 on travel by American citizens and legal residents to Cuba. The bill would also end restrictions on related transactions incident to such travel, including banking transactions.

Several of the bill’s sponsors expressed their enthusiasm. Senator Jeff Flake said: “We have tried this current policy — we have prohibited travel for about 50 years, and it hasn’t worked . . . It’s time to allow Americans to travel freely to Cuba.” Senator Dick Durbin said: “It’s time for a new policy. . . I think we’re going to see dramatic change in Cuba if there’s more travel, exchange and business between our two countries.”

Zane Kerby, President and CEO of the American Society of Travel Agents (ASTA), expressed the industry’s support for the proposed legislation: “While the Administration’s recent actions on Cuba were a step in the right direction, it is Congress that needs to step up to the plate on travel freedom. We are seeing that leadership now from Senators Flake, Leahy and their bipartisan coalition, and we will do everything in our power to get this bill across the finish line.”

A companion bill to S. 299 is expected to be introduced in the House of Representatives next week by Reps. Jim McGovern (D-MA) and Mark Sanford (R-SC).

To read a draft of S. 299, the Freedom to Travel to Cuba Act of 2015, click here.

[1] The four Republican senators are: Jeff Flake (R-AZ), Jerry Moran (R-KS), Mike Enzi (R-WY), and John Boozman (R-AR). The four Democrat senators: Patrick Leahy (D-VT), Dick Durbin (D-IL), Tom Udall (D-NM), and Sheldon Whitehouse (D-RI).

[2] The categories of permitted travel to Cuba are: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.

January 16, 2015June 4, 2015 by Jose A. Aquino

Easing Of Restrictions On Travel To Cuba Goes Into Effect

On December 17, 2014, the Obama Administration announced new regulations governing travel to and trade with Cuba. Today, the U.S. Department of the Treasury and the U.S. Department of Commerce published in the Federal Register the revised Cuban Assets Control Regulations and Export Administration Regulations, which put into effect changes to the sanctions against Cuba administered by Treasury’s Office of Foreign Assets Control and Commerce’s Bureau of Industry and Security.[1] The regulations are effective as of January 16, 2015.

The new regulations will immediately impact travel to Cuba. Although travel to Cuba for general tourist activity is still prohibited, under the new regulations, Americans will face fewer obstacles when traveling to Cuba, effectively ending the travel ban to the island. The administration’s new rules on travel and trade further the President’s goal of normalizing relations with Cuba by easing restrictions on travel, business and remittances. Under the previous rules, Americans traveling to Cuba had to justify their trips under 12 categories of permitted travel and in most cases obtain a specific license from the Treasury Department.[2] Although travel to Cuba will still be limited to the twelve existing categories, the new regulations are drafted in such a way that allow most Americans to travel to Cuba without obtaining a specific license from the U.S. government. Travel previously authorized by specific license will be authorized by general license, subject to appropriate conditions. This means that individuals who certify that meet the conditions laid out in the regulations will not need to apply for a license to travel to Cuba.

Airlines and travel agents will also be allowed to provide service to Cuba without a specific license. Americans may now book travel directly with airlines and travel agents instead of through government authorized agencies. The new regulations will significantly affect the travel, hospitality and leisure sector, including airlines, cruise lines, hotels and travel agencies.

Travelers will be allowed to spend as much money as they want on travel-related expenses while in Cuba, which was previously limited. Additionally, travelers will be allowed to engage in transactions related to travel within Cuba, including paying for costs of living expenses and purchasing goods for personal use while in Cuba. Travelers will also be allowed to use U.S. credit and debit cards in Cuba.

U.S. insurers will be allowed to provide coverage for global health, life, or travel insurance policies for individuals ordinarily resident in a third country who travel to or within Cuba. Health, life, and travel insurance-related services will continue to be permitted for authorized U.S. travelers to Cuba.

[1] U.S. Department of the Treasury regulations can be found at 31 Code of Federal Regulations (CFR), part 515, see here. U.S. Department of Commerce regulations can be found at 15 CFR parts 730-774, see here.

[2] The twelve categories of permitted travel to Cuba are: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.