Archive for the ‘Cuba Sanctions’ Category



Cuba Sanctions Confuse Miami Television Station

Posted by at 3:47 pm on October 2, 2015
Category: Cuba SanctionsOFAC

Baracoa Main Street by Jorge E. San Roman (CC BY-SA 2.5)The NBC affiliate in Miami on September 29 issued an “investigative report” with the title “Millions of Dollars Sent to Cubans Abroad Being Blocked by U.S. Government.”  It starts as follows:

As the U.S. continues to ease sanctions against Cuba, more money is being allowed to flow from the states to the island. While the changes have benefited those living in Cuba, the NBC6 Investigators found that millions of dollars being sent to Cubans abroad are being blocked by the U.S. government.

The report says that it heard that money being sent to Cuban nationals outside of Florida was disappearing and that “after months of investigation,” it finally determined what should have been obvious. The money had been blocked because of OFAC rules. This led to the money quote in the story from one of the victims who sent money and had it blocked:

“That’s people’s money and they can’t keep it just because,” Cruz said.

Oh, yes they can. (Of course, I sympathize with Mr. Cruz’s point and certainly believe that OFAC shouldn’t keep money “just because,” but that’s what they do.)

So what’s going on here? The “investigative report” doesn’t really help much, probably because the reporters probably have no clue as to how OFAC’s regulations work here. The starting point in figuring this out, as regular readers know, is that section 515.201 prohibits transfers of funds to Cuban nationals, wherever located, whether they are in Cuba or Mexico. Blocking transfers to Cuban’s outside Cuba is pretty much an example of blocking “just because,” if the purpose of the sanctions is to deprive the Castro regime of money.

Of course, there are two exceptions that come into play here that may permit transfers to funds to Cubans wherever located. The first is the provision for personal remittances in section 515.570. There is no dollar cap on those now, but we can speculate that prior wires to Cuban nationals would have been blocked because they exceeded the limits (in terms of amounts and permissible transferees) that were in place prior to these restrictions being (mostly) lifted.

The second, of course, is the general license (beloved to Major League Baseball) in section 515.505. That general license unblocks Cuban nationals that have taken up permanent residence outside Cuba. You have to suspect this would have applied to many, if not most, of the transfers at issue. Since permanent residence can be documented under section 515.505 by a sworn statement that the individual does not intend to return to Cuba, it shouldn’t be that hard to transfer money, particularly now, to Cubans outside Cuba.

So, when the “investigative report” left the misleading impression that money couldn’t be sent to Cubans outside Cuba, that was simply because the reporters had not figured out that the dollar amount and permissible transferee restrictions have been, largely, lifted and that no restrictions are imposed on Cubans that have decided to move permanently to countries other than Cuba.  The moral of the story is this: don’t believe everything you see on TV news.

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New Cuba Rules Admit the Embargo Threatened the Safety of Civil Aviation

Posted by at 8:54 pm on September 22, 2015
Category: BISCuba SanctionsOFAC

A Cubana Ilyushin Il-96-300 at Domodedovo International Airport by Dmitriy Pichugin [GNU Free Documentation License, Version 1.2 ], via [cropped]

This blog has noted before that comprehensive embargoes by the United States that cover civil aircraft parts flaunt the Convention on International Civil Aviation to which the United States is a party inasmuch as they endanger the lives of people in the air and on the ground in countries not subject to the embargo.  The new Cuba rules proposed by the Bureau of Industry and Security (found here) and by the Office of Foreign Assets Control (found here) begin to correct this problem, at least as far as the Cuba embargo and BIS are concerned.

Articles 4 and 44 of the Convention make clear that member states are not to compromise the safety of civil aviation  as an instrument of national policy against other countries or to take actions in pursuing national goals that would endanger civil aviation in other member states. Use of an embargo to withhold essential parts for civilian aircraft clearly conflicts with these principles and with the United States’ obligation under the Convention.

The proposed amendments forthrightly admit that the U.S. embargo endangers civil aviation by now adding section 746.2(b)(6) which, as now amended, states:

License applications for exports or re-exports of items to ensure safety in civil aviation, including the safe operation of commercial passenger aircraft will be considered on a case-by-case basis.

Not only does this admit that the embargo had a deleterious effect on flight safety, but it leaves open the possibility that the U.S. could continue to endanger flight safety on a “case-by-case basis.” One has to wonder why there would ever be a question with respect to “items to ensure safety in civil aviation.”

Of course, OFAC is up to its neck as well in this problem, because it also regulates exports and re-exports to Cuba. The general license in section 515.533* for exports of items licensed by BIS only covers items exported from the United States or items re-exported from the United States with 100% U.S. content. In the case of items with less than 100% U.S. content re-exported from outside the U.S., an OFAC license will be required (which will be in addition to a BIS license if the item is subject to the EAR, i.e., has 25% or more U.S. content.)

The new OFAC rules, however, do not contain an explicit statement of the licensing policy for Cuba. And unlike the case with Iran, where OFAC published a licensing policy for exports “to ensure the safe operation of Iranian commercial passenger aircraft,” there is no such published policy with respect to Cuban commercial passenger aircraft, although OFAC may informally be applying that policy. So, at least with respect to re-exports of goods with less than 100% U.S. content, OFAC appears to be free to continue to violate the Convention to the detriment of international civil aviation, although whether it will do so remains to be seen.

*Because the Internet is hard, OFAC has, apparently by mistake, removed the complete text of the Cuba regulations from its site and now links instead only the text of the public notice announcing the new amendments.

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Friday Grab Bag

Posted by at 5:32 pm on September 18, 2015
Category: BISCuba SanctionsOFAC

Grab BagHere are a few recent developments that you may have missed:

  • Adam Szubin, former OFAC head, threatens to re-impose sanctions on Iranian banks in confirmation hearings on his nomination as Treasury Department Under Secretary for Terrorism and Financial Intelligence.
  • DC  tabloid Washington Examiner suggests that BIS is about to realize more rules lifting parts of the Cuba embargo; quotes DC attorney and embargo cheerleader who predicts end of the world as we know it if that happens. UPDATE: New BIS regulations are here and new OFAC regulations are here. They will be effective when published on Monday (9/21/2015). World to end on following day.
  • Sony’s deal to distribute Cuban music is premised, naturally, on the informational materials exception, and has been in the works for two years with OFAC granting travel licenses for Sony executives to go to Cuba to negotiate the deal.
  • Foreign Policy magazine’s blog is all worked up about military applications of mind-reading machines and possible proliferation of this “dual use” technology. Next week, the folks at Foreign Policy blog are going to urge that warp speed space ships be added to the USML.
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Through the Looking Glass: ITC To Investigate Cuban Restrictions on U.S. Trade

Posted by at 10:52 pm on September 9, 2015
Category: Cuba SanctionsInternational Trade CommissionOFAC

Cuba - Havana - Car by Didier Baertschiger [CC-BY-SA-2.0 (], via Flickr[cropped]

I’m not sure that chutzpah is a term applicable to government agencies, but, if it is, this is chutzpah. The International Trade Commission announced that it is investigating how

Cuban non-tariff measures, Cuban institutional and infrastructural factors, and other Cuban barriers … inhibit or affect the ability of U.S. and non-U.S. firms to conduct business in and with Cuba.

Say what? The U.S. has imposed an almost total embargo on all trade with Cuba for more than 50 years and now the U.S. is worried about the impact that Cuban non-tariff trade barriers have had on U.S. trade with the island? This is not much different from foxes complaining about chicken wire after they’ve already slipped through it and eaten all the chickens.

Not surprisingly, partisan politics is behind this insanity. The ITC investigation was originally opened at the behest of Democratic Senate Finance Chairman Ron Wyden, who asked that the ITC investigate the impact that the U.S. embargo on Cuba had on U.S. trade with Cuba. When Republican Orrin Hatch took over the Senate Finance Committee, he was not having any of that and asked the ITC to also look at Cuba’s restrictions on U.S. trade.

Your tax dollars at work.

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Skateboarding on Thin Concrete

Posted by at 9:02 pm on August 25, 2015
Category: BISCuba SanctionsOFAC

Santa Monica Skateboarder by Clif BurnsAn article in today’s Washington Post may be attracting some attention over in the halls and cubicles of the Office of Foreign Assets Control (“OFAC”).  It describes in some detail how Miles Jackson, a local DC man and skateboarding enthusiast, appears to have been skating around the U.S. embargo on Cuba to deliver skateboards to Cuba and to spend time with his skateboarding buds in Havana.

Apparently the skateboarder became interested in Cuban skateboarding while studying abroad in Cuba during college.  So far, so good; nothing wrong with that.

The dicey stuff starts after he returns to the United States and wants to keep up with his skateboarding buddies in Cuba and send them real skateboards, notwithstanding the travel and export bans for Cuba.

Jackson and [a friend] Bradley began traveling to Cuba that September to drop a few boards off. Because direct travel from the United States was limited, their first trips went through Toronto, Bradley said.

That sentence probably should be re-written to remove the word “limited” — “Because direct travel from the United States was illegal, their first trips went through Toronto.” Of course, direct travel would be legal with a license, but then you wouldn’t go through Canada. Of course, maybe Jackson did get an OFAC license to go skateboarding in Cuba and decided to take the long route through Toronto.

On top of that, Jackson started exporting skateboards to Cuba:

Jackson … regularly travels with up to 50 skateboards at a time. He and his friends, through their nonprofit organization Cuba Skate, have ferried more than 200 skateboards in the past five years to aspiring skaters in the island country.

Of course, that would be okay if licensed, but there is no indication that such licenses were obtained. Another possibility would be export pursuant to BIS License Exception GFT. But that covers parcels addressed to an individual containing quantities normally given as gifts; it does not cover carrying 50 skateboards to Cuba through Canada if that is what happened.

Now Jackson wants to fix up the skateboard parks in Havana. He and some friends

plan to travel again to Havana in September, when they hope to start an ambitious renovation of the country’s only official skatepark, El Patinodromo, on the outskirts of the city. During the rainy season, the park floods, and the metal ramps and rails have begun to rust.

With the embargoes relaxed, Jackson hopes to replace the aging ramps and rails over five to eight weeks, pending permission from the State Department.

The State Department? Really?? Apparently the editors at the Washington Post (like their colleagues at the Wall Street Journal) must also be on vacation.

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