German Store Selling Cuban Rum Online Cut Off By PayPal

Posted by at 7:41 pm on August 3, 2011
Category: Cuba SanctionsForeign Countermeasures

Havana Club Rum PosterAccording to an article dated August 1 in the online edition of German newspaper Die Welt, the U.S. Internet payment company PayPal closed the account of a German website that had been selling Cuban rum among other alcohol and alcohol-related products. PayPal spokesman Christoph Hausel was quoted as saying the company, as a U.S. company, could not process payments for Cuban origin products.

Mr. Hausel is right. Section 515.204 of the Cuban Assets Control Regulations prohibit any person subject to U.S. jurisdiction from engaging in any transaction relating to any product outside the United States which is of Cuban origin.

But that’s not the end of the story here. E.U. Council Regulation No. 2271/96 makes it illegal for any company in the European Union to comply with the U.S. embargo on Cuba. PayPal operates in Europe through a Luxembourg-based banking entity. If that entity had any role in freezing the German company’s funds, it might be in violation of the E.U. Regulations, thereby putting PayPal, as it were, between a rock and a rum place. Not surprisingly, the German website owner is threatening a lawsuit against the Luxembourg entity.


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Copyright © 2011 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

One Comment:

Interesting choice for the photo illustration. Do you have any idea which brand of Havana Club rum is involved? See link for recent court decision.

Comment by Ed Fox on August 10th, 2011 @ 11:07 am