Cozen O’Connor’s Transportation and Trade Department analyzed President Trump’s announced changes in Cuban travel restrictions for U.S. persons. The article was authored by Robert Freeman, Donald J. Kassilke, and Jennifer Ann Urban. We thank them for their insight and are re-posting the article below for additional information to our previous post.
On June 16, 2017, President Trump announced changes to the U.S. policy toward Cuba aimed at tightening travel restrictions on U.S. persons and limiting the Cuban military’s access to U.S. dollars. Although announced on June 16, the policy changes will not take effect until new regulations are issued. The Trump Administration has ordered the Department of the Treasury, Office of Foreign Assets Control (“OFAC”) and the Department of Commerce Bureau of Industry and Security (“BIS”) to initiate the rulemaking process for new regulations within 30 days. It will likely take several months, however, for final regulations to be published. Until that happens, the existing regulations will remain in place.
The rationale for the policy change is to continue to provide economic incentives to the Cuban people while channeling economic support away from the Cuban government. Accordingly, the new policy prohibits direct transactions with the Cuban government, intelligence and security services, and entities owned by the Cuban military. Specifically targeted is Grupo de Administracion Empresarial (“GAESA”), the Cuban military monopoly that owns and controls much of the travel and tourism industry in Cuba.
It is important to note that, according to Frequently Asked Questions published by OFAC, any Cuba-related commercial engagements that may be impacted by the new policy will be permitted provided that those engagements were in place prior to the issuance of the forthcoming regulations. Thus, commercial flights and cruise ship sailings from the U.S. will likely still be permitted. However, depending on the breadth of the regulations, these too could be impacted. Moreover, even if air and vessel transportation remains available, access by individuals to hotel accommodations and other personal services will be limited to those provided by non-governmental entities. The U.S. State Department will publish guidance and a list of entities with whom direct transactions will not be permitted.
President Trump’s revised Cuba policy reiterates the ban on U.S. tourism in Cuba. While the 12 OFAC general license categories of persons permitted to travel to Cuba will remain the same, individual “people-to-people” trips will no longer be allowed. Groups offering people-to-people travel will still be permitted, but employees, consultants, or agents of these groups must remain with the travelers and ensure the group sticks to a full time schedule of educational activities focused on increasing interaction with the Cuban people.
In order to minimize disruptions, persons who have completed at least one travel-related transaction prior to the President’s announcement of the new policy will be permitted to continue with their travel plans and any related commercial transactions, regardless of whether the trip takes place before or after the new regulations have been enacted. Persons who have not yet booked travel may do so, but will need to complete the travel before the new regulations are published. Otherwise, they run the risk of violating the sanctions if new regulations are published while they are in transit to or from Cuba.
There are no changes to the customs allowance of the items that can be brought back to the U.S. from Cuba. Persons must continue to self-certify that the purpose for their travel to Cuba legally falls under one of the 12 OFAC general license categories. Further, travelers will still be required to keep records of any financial transactions from trips to Cuba, which may be audited by OFAC. Cuban-American visits to family on the island and remittances will continue to be allowed.
The effects of the revised policy will not be completely clear until new regulations are available. However, as under the prior regulations, persons subject to U.S. jurisdiction remain generally prohibited from doing business with Cuba unless licensed by OFAC and/or BIS. We would encourage anyone interested in transacting business with Cuba or a Cuban national to seek the advice of legal counsel.