Guest Author: Eric H. Cottrell, Partner and Business Litigation and Government Investigations Practice Group Leader
Frequent flier miles burning a hole in your e-wallet? Feeling the need for some sun, sand, and salsa music? Why not visit the land of Hemingway? No, not Key West … Cuba! Beginning in 2016, American, Alaska, Delta, Frontier, JetBlue, Spirit, Southwest, and United began to offer regular flights to Cuba. However, before you pack your suntan lotion and favorite pair of shades, make sure you know what you can and cannot do as a person subject to U.S. jurisdiction on your Cuban adventure.
The Obama administration significantly relaxed the Cuban embargo and re-established U.S.-Cuban travel and trade relations. Although travel to Cuba for tourist activities remains prohibited by statute, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) has issued general licenses for 12 categories of travel, including: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and meetings; (5) educational activities; (6) religious activities; (7) public performances, athletics, competitions, or the production of art, film, or music; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research and educational institutions; (11) exportation, importation, or transmission of information or informational materials; and (12) certain authorized export transactions. Under a general license, travelers no longer have to obtain prior permission to travel so long as their travel falls within the scope of one of those general licenses. Under these general licenses, individuals can travel to Cuba provided they engage in a full-time schedule of activities related to the categories above that does not allow for free-time or recreation in excess of that consistent with a full-time schedule. Persons relying on these general licenses must merely retain records to prove that their schedule is filled with authorized activities and provide those records upon request.
These general licenses have led to several U.S. businesses, including Google, Airbnb, and Starwood Hotels & Resorts investing in new Cuban ventures. However, the death of Fidel Castro and the election of Donald Trump has left the future of the embargo ultimately uncertain and potentially subject to shifting political whims. Nevertheless, as of publishing, the Obama administration’s amendments to Cuba’s sanction regulations remain in effect.
In 2015 we summarized some of the things a U.S. citizen or company could do in Cuba that they had not been able to do before. The list below lists a few of the most recent amendments to these regulations allowing for increased activity with Cuba.
- You can now legally have a “physical presence” in Cuba so long as it is for an authorized activity. Authorized activities now include entities involved in humanitarian projects, non-commercial activities supporting the Cuban people, and private foundations, research, or educational institutes. The ‘physical presence’ authorization further includes “business presence” i.e. exporters of authorized goods, mail/cargo transportation services, and carrier/travel services. Unfortunately, some of the more typical commercial enterprises aren’t included so you aren’t likely to see a McDonald’s franchise on Varadero Beach anytime soon.
- Planning your next business conference? The OFAC now authorizes travel-related and other transactions to organize professional meetings or conferences in Cuba. The prior rulings only authorized attendance.
- U.S. pharmaceutical companies and medical researchers rejoice (and Cuban mice beware) – the OFAC has issued a new authorization that will allow U.S. citizens and companies to engage in joint medical research projects with Cuban nationals. Further, transactions incident to obtaining FDA approval for Cuban-origin pharmaceuticals are allowed and, if such pharmaceuticals are approved, they can be imported, marketed, sold, and distributed in the United States. U.S. persons participating in these health-related activities are also allowed to open and maintain Cuban bank accounts.
- Speaking of banking, U.S. banks can now (1) process cash and travelers’ checks presented indirectly by Cuban financial institutions, (2) process U-turn transactions,  and (3) open and maintain bank accounts in the United States for Cuban nationals in Cuba to receive payments in the United States.
- Want to film a remake of Cesar Romero and Carmen Miranda’s 1941 “Week-End in Havana” and shoot on the streets of Havana Vieja? Travel-related and other transactions incident to professional media or artistic endeavors are now authorized.
- Sports more your style? Because Cuban nationals in the United States are now authorized to earn a salary beyond basic living expenses and U.S. companies are allowed to engage in transactions relating to the sponsorship or recruitment of Cuban nationals, you might just see even more Cuban baseball players in the MLB.
- Shop till you drop – The Department of Commerce’s Bureau of Industry and Security will generally authorize exports of certain consumer goods sold online (or through other means) directly to individuals in Cuba for personal use.
- Cohiba aficionados, light ‘em up! OFAC has removed the monetary value limitations on what an authorized traveler may bring back to the United States as accompanied baggage … including the value limitation on alcohol and tobacco products (formerly $400). Moreover, if you happen to pick up Cuban-origin goods on your next European vacation, don’t worry – merchandise acquired in third countries and brought back to the United States will be similarly unrestricted. However, before you set up your Cohibas ‘Я Us franchise on Main Street, understand that these goods can only be imported for personal use.
Click here for OFAC’s Q&A on the remaining Cuban Sanctions.
While these regulatory changes reflect increased investment potential, the restrictions on trade and travel remain narrow enough to prevent most U.S. companies from doing business in Cuba. However, assuming Cuba’s economy continues to liberalize, Cubans will presumably have increased access to more private income, creating more purchasing power than ever before and ultimately creating a compelling market opportunity for consumer-facing companies in the United States.
Most of the restrictions on traveling to or doing business with Cuba remain in effect. Don’t leave for Cuba without having a complete understanding of what is and is not permissible under U.S. law. For information regarding additional changes to the Cuban embargo or to determine whether your proposed transaction with Cuba is currently authorized, contact our sanctions team:
Annette K. Ebright | email@example.com | (704) 335-9069
Eric H. Cottrell | firstname.lastname@example.org | (704) 335-9850
Katherine Graham | email@example.com | (704) 335-9893