This blog post was written with assistance from Sean C. Church, Paralegal.
On Tuesday, May 28, 2024, the Department of the Treasury's Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations, 31 C.F.R Part 515 (CACR) in order to further loosen sanctions against Cuba. The changes are primarily related to the scope of authorized internet-based services and authorized dealings with the Cuban private sector. There are also changes related to "U-Turn" transactions, reporting requirements for telecommunications-related transactions, and educational activities, among other small language changes.
OFAC is now providing additional examples of services that will be allowed regarding communications over the internet, such as an amendment to § 515.578(a)(1) clarifying that cloud-based services that support internet communications may be exported to Cuba. The changes will include and expand other permitted services to support such communications. However, OFAC is still requiring that services related to items subject to the EAR can only be provided to items that are licensed or otherwise authorized by the Department of Commerce for exportation or re-exportation to Cuba. OFAC has also authorized exports and reexports of Cuban-origin software and mobile applications from the U.S. to third countries.
Under the regulations, OFAC historically authorized some transactions with "self-employed individuals." The amendments also change the term "self-employed individual" to "independent private sector entrepreneur." The term will continue to include self-employed individuals (cuentapropistas), but is expanded to cooperatives and private businesses wholly owned by or consisting solely of individuals to its definition. Private businesses and sole proprietorships of up to 100 employees will also be covered by the updated term. These changes will open the door to further transactions in Cuba that involve solely the private sector.
OFAC is also reinstating an authorization for "U-turn" transactions. This will facilitate remittances and payments for authorized transactions in the Cuban private sector. Any banking institution which is a person subject to U.S. jurisdiction will now be allowed "to process funds transfers in which Cuba or a Cuban national has an interest if the funds transfers originate and terminate outside the United States, provided that neither the originator nor the beneficiary is a person subject to U.S. jurisdiction." Transactions outside of this scope will still be prohibited unless otherwise authorized or exempt under the regulations.
The reporting requirements are being amended to replace the fax or mailing requirement with a requirement to email reports to OFACReport@treasury.gov. OFAC is also clarifying that the reporting requirement in paragraph (g) of § 515.542(g) applies to entities engaging in transactions to provide telecommunication services pursuant to paragraph (b), (c), or (d), and not banking institutions processing payments on behalf of such providers.
OFAC also published several new FAQs which can be found here. They address questions related to the definition of "independent private sector entrepreneur," situations where Cuban state-owned entities are involved, authorized internet-based services to prohibited officials and communist party members in Cuba, due diligence expectations, and more.
For the full changes to the CACR by OFAC, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.