During the past month, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) has issued three separate rounds of Specially Designated Nationals & Blocked Persons List (“SDN List”) designations in order to support protests in Cuba that began on July 11th. Further, OFAC and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a joint fact sheet describing existing OFAC general licenses (“GLs”) and BIS license exceptions that facilitate certain telecommunications equipment, software, and services exports to Cuba without prior approval by the U.S. government.
Using its authority under the Global Magnitsky Act, OFAC added a total of five Cuban government officials and three Cuban government entities to the SDN List on July 22nd, July 30th, and August 13th. All property and interests in property of these SDNs that are or come within the U.S. or the possession or control of U.S. persons are blocked as of the below effective dates, and U.S. persons are generally prohibited from engaging in transactions involving such SDNs unless authorized by OFAC.
-Brigada Especial Nacional del Ministerio del Interior (“SNB”) – Also known as the Boinas Negras or Black Berets, the SNB is a special forces unit under the Cuban Ministry of the Interior – Blocked July 22, 2021
-Policia Nacional Revolucionaria (“PNR”) – A police unit under the Cuban Ministry of the Interior – Blocked July 30, 2021
-Tropas de Prevencion (“TDP”) – Also known as the Boinas Rojas or Red Berets, the TDP is a military police unit of Cuba’s Revolutionary Armed Forces, which is commanded by Cuba’s Ministry of Revolutionary Armed Forces – Blocked August 13, 2021
-Lopez Miera, Alvaro – Minister of the Revolutionary Armed Forces of Cuba – Blocked July 22, 2021
-Callejas Valcarce, Oscar Alejandro – Director of the PNR – Blocked July 30, 2021
-Sierra Arias, Eddy Manuel – Deputy Director of the PNR – Blocked July 30, 2021
-Martinez Fernandez, Pedro Orlando – Chief of the Political Directorate of the PNR – Blocked August 13, 2021
-Sotomayor Garcia, Romarico Vidal – Chief of the Political Directorate of the Cuban Ministry of the Interior – Blocked August 13, 2021
OFAC’s “50% Ownership Rule” will also extend these blocking sanctions to any entities owned 50 percent or more, individually or in the aggregate, directly or indirectly, by one or more of these newly designated SDNs.
Joint Fact Sheet: “Supporting the Cuban People’s Right to Seek, Receive, and Impart Information through Safe and Secure Access to the Internet”
Cuba remains comprehensively sanctioned by the U.S. government and most transactions between the U.S. and Cuba remain prohibited. However, in a jointly issued fact sheet dated August 11th, 2021, OFAC and BIS outlined existing OFAC GLs and BIS license exceptions available to exporters of telecommunications equipment, software, and services to Cuba under the Cuba Assets Control Regulations (31 CFR § 515.101, et seq., the “CACR”) and the Export Administration Regulations (15 CFR § 730.1, et seq., the “EAR”). The fact sheet serves as a reminder that despite the embargo on Cuba, there are certain avenues for trade that the U.S. government allows without any prior review, so long as there is strict adherence to the CACR and the EAR. OFAC GLs highlighted by the fact sheet include:
-Exportation or reexportation of services incident to the exchange of communications over the internet, and installation, repair, or replacement services for certain described items. See CACR §§ 515.578, 515.533.
-Exportation or reexportation of telecommunications-related services and related payments. See CACR § 515.542.
-Transactions necessary to maintain a physical presence undertaken by various enumerated types of organizations such as news bureaus, educational organizations, religious organizations, humanitarian organizations, telecommunications services providers, and internet-based services providers. See CACR § 515.573.
-Provision of internet-based distance learning. See CACR § 515.565.
-Exportation or reexportation of information and informational materials (including of a commercial nature) so long as certain requirements are met. See CACR §§ 515.206(a), 515.545.
BIS license exceptions highlighted by the fact sheet include:
-Consumer Communications Devices (“CCD”). Authorizing the export and reexport of certain items such as mobile phones and modems to individuals and independent non-governmental organizations in Cuba. See EAR § 740.19.
-Items in Support of the Cuban People (“SCP”). Authorizing the export and reexport of certain EAR99-designated items and of certain telecommunications infrastructure items. See EAR § 740.21.
Each of the above OFAC GLs and BIS license exceptions impose specific limitations, terms and conditions which must be complied with carefully. None of the above GLs or license exceptions would authorize a transaction involving an SDN or an entity controlled 50 percent or more by SDNs— specific licenses would be required under such circumstances. Additionally, depending on the specific facts and circumstances of a given activity, many of the above-listed OFAC GLs will prohibit direct financial transactions between persons subject to U.S. jurisdiction and persons listed on the U.S. State Department’s Cuba Restricted List.
The fact sheet also indicated that OFAC and BIS will provide favorable licensing treatment for activities benefiting the free flow of information to and from Cuba that are not otherwise authorized under the above-described OFAC GL’s and BIS license exceptions. For OFAC’s licensing policy, the fact sheet states that “For prohibited transactions not otherwise authorized by OFAC general licenses, OFAC considers specific license requests on a case-by-case basis and will prioritize license applications, compliance questions, and other requests that may concern internet freedom in Cuba . . . OFAC has a favorable licensing posture towards specific license requests involving transactions that are ordinarily incident and necessary to ensure that the Cuban people have safe and secure access to the free flow of information on the internet.” Likewise, for BIS’s licensing policy, the fact sheet states that “A general policy of approval applies to [BIS] license applications for telecommunications items and internet-related items intended to improve communications to, from, and among the Cuban people (emphasis supplied).”
Grant Leach is an Omaha-based partner with the law firm Husch Blackwell focusing on international trade, export controls, trade sanctions and anti-corruption compliance.
Tony Busch is an attorney in Husch Blackwell’s Washington, D.C. office.