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White House Announces Another Round of Sweeping Regulatory Adjustments to Cuban Sanctions

9/28/2015

Although Congress has remained cautious of taking any action to ease the American-imposed embargo on the majority of business interactions with Cuba, President Obama’s administration continues to push forward with the implementation of additional revisions to ease sanctions and potentially secure economic opportunities for both countries.

The changes made by the Department of the Treasury and the Department of Commerce that took effect September 21, 2015, have the potential to impact businesses in the financial, construction, agriculture, cargo, transportation, education, telecommunications, legal, and travel industries.

Among the changes are regulations which provide that:

  • U.S. entities engaging in certain business categories of authorized activities will be allowed to establish and maintain a physical presence, such as an office, retail outlet, or warehouse in Cuba, including for agricultural products, materials for construction/renovation of privately-owned buildings, mail or parcel transmission services and certain cargo transportation services. These individuals and entities will also be authorized to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba.
  • All authorized travelers will be allowed to open and maintain bank accounts in Cuba in order to access funds for authorized transactions while in Cuba.
  • U.S. entities will be allowed to establish a business presence in Cuba, including through joint ventures with Cuban entities, to provide certain telecommunications and internet-based services, as well as to enter into licensing agreements and to market such services.
  • The provision of certain legal services to Cuba and Cuban nationals will be expanded to allow the receipt of payment for such services.
  • Academic exchange programs and joint noncommercial academic research with universities or academic institutions in Cuba will be authorized.

The success of these measures and others implemented by the Executive Branch depends on their acceptance by the Cuban government, which will likely place its own restrictions on American business opportunities. Moreover, the uncertainty regarding how the Cuban government deals with its multiple currencies and whether it will facilitate the hiring of its Cuban workforce by U.S.-based entities will surely have a bearing on quality risk assessments for private enterprise.

The President first announced his Cuba policy in December 2014, and the federal government has continued to take coordinated actions in support of that policy, but ultimately Congressional action or inaction will be the determining factor as to the extent of the relationship between the two countries.