OFAC announces changes in sanctions rules on Cuba
In previous Sanctions Alerts, we have discussed the Trump administration's shift in its sanctions policy against Cuba. Last week, the Department of the Treasury's Office of Foreign Assets Control (OFAC) took additional steps intended to financially isolate the Cuban government.
On 6 September 2019, OFAC amended the Cuban Assets Control Regulations 31 CFR part 515. In short, the amendments (i) put an end to "U-turn" transactions involving Cuba (as further described below), (ii) impose new restrictions on certain categories of remittances to Cuban nationals, and (iii) authorize remittances to support the operation of economic activity in the non-state sector by self-employed individuals. The amendments will take effect on 9 October 2019.
Further on the reversal of the policy on "U-turn" transactions involving Cuba
Currently, banking institutions subject to US jurisdiction are authorized "to process" funds transfers relating to Cuba, originating and terminating outside the United States, provided that neither the originator nor the beneficiary are persons subject to US jurisdiction – so-called "U-turn" transactions. Effective 9 October 2019, banks will instead be authorized "to reject" such transfers. This means that "U-turn" transactions relating to Cuba will no longer be allowed, according to OFAC's new FAQ (see in particular FAQ 65).
Consequently, companies should be aware that transactions via US banking institutions that involve Cuba, Cuban nationals or Cuban entities could be rejected although the funds transfers originate and terminate outside the US, and where neither the originator nor the beneficiary is a person subject to US jurisdiction.
Our previous discussion of the Trump administration's shift in sanctions against Cuba is found here, and our discussion on the activation of Title III here of the Libertad Act of 1996 is published here.