Member Article

In a continued effort to implement the policy changesannounced by President Obama on December 17,

2014, OFAC and BIS have announced additional amendments tothe CACR and EAR, respectively, which will be published and effective on Monday,September 21, 2015.

The regulatory changes discussed below are more in the lineof significant changes made to the regulations since December 17, 2014.Overall, the regulatory changes loosen restrictions on travel to and businessand investment in Cuba. First, the regulatory changes provide additionalclarity as to how US businesses can conduct transactions and finance operationsin the island, including the opening of physical locations in Cuba. Further,the changes allow certain US persons to open and maintain bank

accounts in Cuba and allow certain additional financialtransactions. The regulatory changes also make it easier for cruise ships andother vessels to travel to Cuba, further facilitating travel to the island.

Travel

The changes to the CACR authorize the provision of carrierservices to Cuba by vessel without the need for a specific license from OFACand clarify which categories of persons may be transported between Cuba and theUS The changes to the CACR now permit all authorized travelers to Cuba to openand maintain bank accounts in Cuba in order to access funds to undertakeauthorized transactions while in the island.

OFAC’s changes to the CACR also remove the limitation oncertain authorized remittances that authorized travelers or Cuban nationalsthat are permanent residents of Cuba and departing the US may carry into Cuba.

Physical Presence inCuba for Certain US Persons

OFAC’s changes to the CACR allow certain US persons toestablish a physical presence in the island. The authorizations cover thefollowing: news bureaus, certain exporters of goods authorized pursuant to theCACR, providers of authorized mail and parcel transmission services and cargotransportation services, providers of telecommunications or Internet-basedservices (further discussed below), providers of travel and carrier services,and organizations or entities conducting educational or religious activities.

Like persons generally authorized to travel to the island,those US persons who are permitted to establish a physical presence in theisland may also open and maintain bank accounts at financial institutions inCuba in order to undertake authorized transactions.

Providers ofTelecommunications and Internet-based Services

OFAC’s changes amend the regulations governing the provisionof telecommunications and Internet- based services in order to allow US personsengaged in the provision of such services to establish and maintain a presencein Cuba, including through subsidiaries, branches, offices, joint ventures,franchises, and agency or other business relationships with any Cubanindividual or entity. The US persons providing such services may also enterinto licensing agreements relating to the services and may market the services.

The changes to the CACR now permit the importation into theUS of Cuban-origin mobile applications and permit US persons to employ Cubannationals in order to develop such mobile applications.

Banking and Finance

Depository institutions were formerly allowed to open andmaintain accounts for a Cuban national who was present in the US subject to therequirement that such accounts not closed prior to the departure of the Cubannational from the US be blocked. The changes to the CACR now authorize depositoryinstitutions to maintain these accounts while the Cuban national account holderis located outside the US, provided that the holder may only access the accountwhile lawfully present in the US. The regulatory changes also remove theprevious $250 cap on payments from blocked accounts in order to more adequatelyallow Cuban nationals lawfully present in the US to access sufficient funds forliving expenses and other transactions incident to their presence in the US.

The cap on donative remittances to Cuban nationals who arenot otherwise identified in the CACR as prohibited officials of the Governmentof Cuba or prohibited members of the Cuban Communist Party had formerly beenraised, pursuant to the changes instituted on January 16, 2015, from $500 to$2,000 for any consecutive three-month period. The present changes tothe CACR remove the cap on donative remittances altogether, although the otherlimitations on the remittances remain. Depository and banking institutionssubject to US jurisdiction may also open, maintain and close bank accounts forCuban nationals located in third countries and may processremittances from Cuban nationals located in third countries to the US.

Other Changes andAmendments

Legal Services: OFAC’s changes to the CACR now explicitlyand generally authorize persons subject to US jurisdiction to receive, and makepayment for, certain legal services from Cuba or Cuban nationals. Morespecifically, receiving and making payment for legal advice and counseling onthe requirements of and compliance with the laws of Cuba or any jurisdictionwithin Cuba is authorized provided that such advice and counseling relate totransactions authorized by or exempt from the CACR.

Ordinary Incident Transactions: The regulatory changesclarify that, with certain exceptions, transactions ordinarily incident to alicensed transaction and necessary to give effect thereto are also authorized,including payments made in relation to authorized transactions.

Conclusion

The regulatory changes that will become effective onSeptember 21, 2015 further loosen the restrictions placed on the ability toengage in business and commerce with Cuba. Notably, certain types of USbusinesses are allowed to establish a physical presence in Cuba whiledepository and financial institutions are allowed to undertake additionaltransactions related to Cuba and Cuban nationals in the US, Cuba and thirdcountries. Finally, US businesses may receive and make payment for certainlegal services in Cuba in order to comply with Cuban laws and regulations andengage in authorized business in the island.

The Latin America Group at Hunton & Williams willcontinue to closely monitor related developments. Please contact us if you haveany questions or would like further information regarding the changes to theCACR that have been announced by OFAC and that will be published on September21, 2015, or any other regulation or sanction governing the Cuban embargo.