Obama made history when he eased the nation’s long-standing economic sanctions against Cuba. But before you break out your cigar, there are just a few, simple changes you should know. The changes to the Cuban Assets Control Regulations affect a number of areas, including travel to Cuba, foreign remittances to Cuba, the ability of U.S. financial institutions to work with Cuban financial institutions, and authorization for certain transactions with Cuban nationals living outside of Cuba. The summary below focuses on the changes that could affect your operations.
Unblocking of Certain Cuban Nationals
Tape lifted – OFAC is no longer blocking transactions by or to individuals who are Cuban nationals that have taken up residence in the United States or another country. Their residency status must be as either a citizen or a lawful permanent resident alien with an adjustment application pending or are lawfully present and intending to lawfully remain in the U.S. on a permanent basis. These individuals cannot be prohibited officials of the Cuban government or a prohibited member of the Communist party. Entities owned by individuals that are now unblocked may also be eligible for unblocked status.
Tape stays – Individuals do not give up their unblocked status if they move to a different country. They remain unblocked until or if they move back to Cuba. The revised regulation requires that you document your determination that the individual qualifies for unblocked status. This means you must obtain documentation issued by a government authority that demonstrates citizenship of or lawful permanent residence in the U.S or another country. Such documentation could include a passport, voter registration card, permanent resident alien card, national identity card, or other similar document. For a person who does not have one of these documents, evidence that the person has lived outside of Cuba for the past two years without interruption, or a sworn statement that the person does not intend to, or would not be welcome to, return to Cuba could substantiate unblocked status.
Remittances
Tape lifted – The revised regulations have increased the per-quarter limits on remittances to Cuban nationals by persons subject to U.S. jurisdiction from $500 to $2,000, provided the remittances are not made by a blocked source or to a recipient who is a prohibited official of the Cuban government or a prohibited member of the Communist party.
Tape stays – In addition, the remittances cannot be for emigration-related purposes and the remitter, if an individual, must be at least 18 years old. Remittances in excess of these limits may be performed on a case-by-case basis for humanitarian projects, for support of the Cuban people, or for development of private business in Cuba. All documentation must be retained for five years.
Credit and Debit Cards
Tape lifted – U.S. credit and debit cards may now be used in Cuba for travel-related and other transactions and U.S. financial institutions may enroll merchants and process these transactions. All transactions that are incident to the processing and payment of credit cards, debit cards, stored value cards, checks, drafts, travelers, checks and similar instruments used or negotiated in Cuba by an unblocked person are also authorized.
Correspondent Accounts
Tape lifted – U.S. depository institutions can now open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions and to permit the rejection or processing of certain funds transfer transactions.
Individual Accounts
Tape lifted – U.S. depository institutions may also now open and maintain accounts for Cuban nationals who are in the U.S. in a non-immigrant status or pursuant to other non-immigrant travel authorization for the duration of their stay in the U.S.
Tape stays – The accounts must be closed prior to the individual’s departure and, if not closed, must be blocked and reported as such.
Jane Pannier is senior vice president and in-house counsel for AffirmX LLC, a developer of an innovative remote compliance review solution. Ms. Pannier is also SVP of AdvisX, a CUSO that specializes in using technology to more effectively deliver consulting services to financial institutions.
