On June 16, 2017, President Trump issued a National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, which begins a process to alter some aspects of U.S. policy towards Cuba, but retains much of the Obama Administration’s reforms to travel, business and trade with Cuba.
The signaled changes focus on limiting business with companies related to Cuba’s military, intelligence and security apparatus and tightening aspects of the administration of existing travel allowances. Existing business and travel arrangements affected by the changes may be grandfathered.
There are no immediate changes to U.S. sanctions or export control policy. The memorandum sets the framework for the Office of Foreign Assets Control (OFAC), Bureau of Industry and Security (BIS) and other agencies to consider regulatory changes in the coming months.
Direct Financial Transactions with Cuban Military-Owned Entities
The Administration’s new policy targets transactions with the Cuban military, specifically Grupo de Administración Empresarial (GAESA). GAESA is the business conglomerate owned by the Revolutionary Armed Forces and controls over 50 enterprises across most sectors of the Cuban economy. The State Department will be identifying and publishing a list of entities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel (such as GAESA). “Direct financial transactions” with these entities will be prohibited, except for transactions that:
- concern Federal Government operations, including Naval Station Guantanamo Bay and the United States mission in Havana;
- support programs to build democracy in Cuba;
- concern air and sea operations that support permissible travel, cargo, or trade;
- support the acquisition of visas for permissible travel;
- support the expansion of direct telecommunications and internet access for the Cuban people;
- support the sale of agricultural commodities, medicines, and medical devices sold to Cuba consistent with U.S. law;
- relate to sending, processing, or receiving authorized remittances;
- otherwise further the national security or foreign policy interests of the United States; or
- are required by law.
In general, persons subject to U.S. jurisdiction remain eligible to travel to Cuba if they meet one of twelve general license categories. However, the memorandum directs OFAC to eliminate the provision authorizing individual people-to-people travel to Cuba which, in the Administration’s view, poses the highest risk of potential abuse of the statutory ban on tourism.
The existing authorization will remain in effect until OFAC issues new regulations. In addition, travelers relying on the individual people-to-people authorization will be allowed to engage in future travel-related transactions, even if the travel occurs after OFAC issues regulations, provided that the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 16, 2017.
Travel in connection with academic study pursuant to a degree program as well as group travel with organizations sponsoring people-to-people exchanges will still be permitted. Group travelers must be accompanied by a representative of the sponsoring organization.
OFAC will also be increasing its monitoring and enforcement in connection with individuals traveling to Cuba. In particular, OFAC will be required to regularly audit travel to Cuba to ensure that travelers are complying with relevant statutes and regulations.
Prohibited Cuban Officials
OFAC must also amend the definition of “prohibited officials of the Government of Cuba” which could have an impact on certain remittances and telecommunications-related transactions.
Existing general licenses for certain telecommunications transactions and remittances included limitations on dealing with prohibited officials. Under the current rules, “prohibited officials of the Government of Cuba” is narrowly defined as members of the Council of Ministers and flag officers of the Revolutionary Armed Forces. The memorandum requires the definition be expanded to include:
- Ministers and Vice-Ministers, members of the Council of State and the Council of Ministers;
- members and employees of the National Assembly of People’s Power; members of any provincial assembly;
- local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub–Director Generals and higher of all Cuban ministries and state agencies;
- employees of the Ministry of the Interior (MININT);
- employees of the Ministry of Defense (MINFAR);
- secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions;
- chief editors, editors, and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; and
- members and employees of the Supreme Court (Tribuno Supremo Nacional).
Timing and Impact on Existing Business Activities
Guidance indicates the forthcoming regulations are prospective and will not affect existing contracts and licenses. In addition, any Cuba-related commercial engagement that includes direct transactions with prohibited entities will be permitted, provided that the engagements were in place prior to the issuance of the regulations.
In terms of timing, U.S. Treasury and Commerce must initiate the process of drafting new regulations within 30 days. However, there is no deadline by which these agencies must issue the new regulations.