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United States: US Government restricts remittances to Cuba

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On October 27, 2020, the US Treasury Department’s Office of Foreign Assets Control (OFAC) published a final rule amending the Cuban Assets Control Regulations (CACR) restricting certain remittance-related transactions to and from Cuba (the “Final Rule”). OFAC also published updated and new Frequently Asked Questions (FAQs) related to transactions with Cuba. Significantly, the recent amendments will have the practical effect of making remittances to Cuba more difficult.

The Final Rule becomes effective on November 26, 2020 and is yet another amendment to the CACR targeted at decreasing travel, trade, and transactions with Cuba. For additional information on recent amendments to the CACR, see our blog post here and here.

The Final Rule amends the CACR to prohibit the collection, forwarding, or receipt of remittances involving entities or subentities identified on the US State Department’s Cuba Restricted List (CRL). The CRL, maintained by the US State Department, is a list of entities and subentities that are under the control of, act for or on behalf of, the Cuban military, intelligence, or security service or personnel, and with which direct financial transactions would disproportionately benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people. Specifically, the Final Rule removes CRL entities from the scope of the following general licenses:

  1. CACR § 515.570, authorizing, in relevant part, remittances from persons subject to US jurisdiction to nationals of Cuba who are close relatives and to Cuban NGOs;
  2. CACR § 515.572(a)(3), authorizing, in relevant part, the provision of remittance forwarding services by US-registered money transmitters; and
  3. CACR § 515.587, authorizing remittances from Cuban nationals to persons subject to US jurisdiction.

OFAC also made corresponding amendments to clarify that such remittance transactions involving CRL parties are not permitted as ordinarily incident to licensed transactions under CACR § 515.421. As a result of these amendments, persons subject to US jurisdiction will no longer be authorized to process remittances to or from Cuba through Cuban financial services companies like FINCIMEX and RAFIN S.A., which are designated on the CRL.

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Nicholas Coward is a partner in Baker McKenzie´s Washington office and serves as chair the Firm’s Global Trade and Commerce Practice Group. He has also chaired the North American International Commercial Practice Group. He has over 30 years experience practicing in the areas of US export controls, trade sanctions and the Foreign Corrupt Practices Act. Mr. Coward served on the Washington Office management committee from 1990 to 2002 including two terms as managing partner and served on the Firm’s Executive Committee from 2002 to 2007.

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Inessa Owens is an associate in the Washington, D.C. office and member of the Firm’s International Trade practice group. She focuses on outbound trade compliance issues, including compliance with the Export Administration Regulations, anti-boycott rules, and economic sanctions administered by the US Treasury Department’s Office of Foreign Assets Control, including those targeting Cuba, Iran, North Korea, Syria, and Russia. She has worked with clients in diverse industries that include finance, pharmaceuticals, and energy.

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Andrea Tovar regularly advises multinational companies on cross-border commercial transactions and complex privacy and international trade matters. Andrea is also a member of the Firm’s Technology, Media & Telecoms Global Industry Group and Co-Chairs the North America Baker Unidos Affinity Group.

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