Over the past month, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) has released three separate sets of Specially Designated Nationals Designations and Blocked Persons Lists (“SDN Lists”) to to support the protests in Cuba that began on July 11. In addition, OFAC and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) have released a joint fact sheet outlining OFAC’s existing general (“GL”) licenses and license exceptions. BIS that facilitate the export of certain telecommunications equipment, software, and services to Cuba without prior U.S. government approval.
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 22, July 30, and August 13. All property and interests in the ownership of such SDNs that are or come into the United States or the possession or control of U.S. persons are blocked as of the effective dates below, and 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 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 Interior – Blocked July 30, 2021
-Tropas de Prevencion (“TDP”) – Also known as Boinas Rojas or Red Berets, the TDP is a military police unit of the Revolutionary Armed Forces of Cuba, which is commanded by the Cuban Ministry of Revolutionary Armed Forces – Blocked August 13, 2021
-Lopez Miera, Alvaro – Minister of Revolutionary Armed Forces of Cuba – Blocked July 22, 2021
-Callejas Valcarce, Oscar Alejandro – PNR Director – Blocked July 30, 2021
-Sierra Arias, Eddy Manuel – PNR Deputy Director – Blocked July 30, 2021
-Martinez Fernandez, Pedro Orlando – Chief Political Officer of the PNR – Blocked August 13, 2021
-Sotomayor Garcia, Romarico Vidal – Head of the Political Directorate of the Cuban Ministry of Interior – Blocked August 13, 2021
OFAC’s “50% Ownership Rule” will also extend these blocking penalties to all entities that are 50% or more owned, individually or collectively, directly or indirectly, by one or more of these newly designated SDNs.
Joint Fact Sheet: “Supporting the Right of the Cuban People to Seek, Receive and Disseminate Information through Safe and Secure Internet Access”
Cuba remains generally sanctioned by the US government and most transactions between the US and Cuba remain prohibited. However, in a jointly published fact sheet dated August 11, 2021, OFAC and BIS outlined the existing OFAC GL and BIS license exceptions available to exporters of equipment, software and telecommunications services to Cuba under the Cuba Asset Control Regulations (31 CFR § 515.101, and following.the “CACR”) and the Export Administration Regulations (15 CFR § 730.1, and following.ear”). The fact sheet recalls that despite the embargo on Cuba, there are certain trade routes that the US government allows without any prior review, as long as there is strict compliance with the CACR and EAR The OFAC GLs highlighted by the fact sheet include:
-Export or re-export of services relating to the exchange of communications over the Internet and services for the installation, repair or replacement of certain items described. To see CACR §§ 515.578, 515.533.
-Export or re-export of services related to telecommunications and related payments. To see CACR § 515.542.
-Transactions necessary to maintain a physical presence performed by various types of listed organizations such as news bureaus, educational organizations, religious organizations, humanitarian organizations, telecommunications service providers, and Internet service providers. To see CACR § 515.573.
– Provision of distance education on the Internet. To see CACR § 515.565.
-Export or re-export of information and information material (including of a commercial nature) provided that certain requirements are met. To see CACR §§ 515.206(a), 515.545.
The BIS license exceptions highlighted by the fact sheet include:
– Consumer Communication Devices (“CCD”). Authorize the export and re-export of certain items such as cell phones and modems to individuals and independent non-governmental organizations in Cuba. To see EAR § 740.19.
– Articles in support of the Cuban people (“SCP”). Authorize the export and re-export of certain designated EAR99 items and certain telecommunications infrastructure items. To see EAR § 740.21.
Each of the above OFAC GL and BIS license exceptions imposes specific limitations, terms and conditions which must be carefully observed. None of the above GLs or license exceptions would permit a transaction involving an SDN or an entity controlled 50% or more by SDNs; specific licenses would be required in such circumstances. Additionally, depending on the specific facts and circumstances of a given activity, many of the OFAC GLs listed above will prohibit direct financial transactions between persons subject to U.S. jurisdiction and persons on the restricted list. of Cuba from the US State Department.
The fact sheet also states that OFAC and BIS will provide favorable licensing treatment to activities benefiting from the free flow of information to and from Cuba that are not otherwise permitted under the licensing exceptions. OFAC GL and BIS described above. For OFAC’s licensing policy, the fact sheet states that “For prohibited transactions not otherwise authorized by OFAC’s general licenses, OFAC reviews specific license applications on a case-by-case basis and grants priority to license applications, compliance issues and other inquiries that may relate to internet freedom in Cuba. . . OFAC has a favorable license posture for specific license applications involving transactions that are usually incidental and necessary to ensure that the Cuban people have safe and secure access to the free flow of information on the Internet. Similarly, for the BIS licensing policy, the fact sheet states that “a general accreditation policy applies to [BIS] license applications for telecommunications articles and Internet-related articles intended to improve communications to, from and between the Cuban people (underlining provided).
Cortney O’Toole Morgan is a Washington DC-based partner with the law firm Husch Blackwell. She runs the firm International trade and supply chain group.
Grant leaching is an Omaha-based partner with the law firm Husch Blackwell that focuses on international trade, export controls, trade sanctions and anti-corruption compliance.
Tony Busch is an attorney in the office of Husch Blackwell in Washington, DC.