Archive for the ‘Cuba Sanctions’ Category



OFAC Debuts New Game Show: Guess That Violation, or Wheel of Misfortune

Posted by at 7:27 pm on November 17, 2015
Category: Cuba SanctionsOFAC

Havana by Bryan Ledgard [CC-BY-SA-2.0 (], via Flickr [cropped]The Office of Foreign Assets Control (“OFAC”) has made sort of a name for itself by issuing cryptic penalty announcements where it is a considerable challenge to figure out what went on and why the unfortunate company that has been whacked with an “agreed” fine got itself tangled up with OFAC in the first place. But the recent penalty slapped on Gil Tours Travel for some vague violation of the Cuba sanctions takes the cake or, I suppose, el pastel.

According to the penalty announcement, Gil was being fined because “dealt in property in which Cuba or Cuban nationals had an interest, by providing Cuba travel-related services involving 191 individuals, without authorization from OFAC,” which is pretty much like saying Gil broke the rules when it broke the rules. But here’s the kicker. In discussing aggravating factors, OFAC says this:

Gil Travel had some awareness that it was providing Cuba-related travel services, and that its conduct could be in violation of the CACR [Cuban Assets Control Regulations]

Say what? It had “some awareness” that it was providing Cuba-related travel service and that this “could” be in violation of the rules? What on earth does that mean? How can you not know whether you are providing Cuba-related services? Close only counts in horseshoes and hand grenades, not rule violations. It’s a binary thing: you either are or are not providing those services and, if you are, you know it. Don’t count on any clarification from OFAC to help anyone figure out what happened here.

Apparently the owner of Gil Tours told (subscription required) Law360 sort of what was going on, although his explanation is not a model of clarity either.

Gil’s president and CEO Igal Hami told Law360 on Wednesday by email that … its only involvement with the trips under investigation was in referring nonprofit agencies that had OFAC licenses to arrange Cuban travel to another tour operator that also had a license.

So, apparently (if this is true), OFAC thinks you violate the CACR if you refer someone to a licensed tour operator unless you have a license to make that referral. In other words, if I included a link here to a licensed provider of people-to-people tours to Cuba, I would be breaking OFAC rules because I don’t have a license to make that referral. No wonder OFAC didn’t want to let on what happened here.

(I’m really, really, really hoping someone at OFAC clicked the link above to see if I had committed this violation. Explanation here.)


Permalink Comments (1)

Bookmark and Share



Banks’ Fear of OFAC Blocks Travel to Cuba

Posted by at 9:15 pm on November 11, 2015
Category: Cuba SanctionsOFAC

Cuba Capitole by y.becart(Own work) [CC-BY-SA-2.0 (], via Flickr

With the corpses of banks skewered by OFAC strewn around everywhere you look, it is not altogether surprising that banks are terrified of the agency and are scared to death that the slightest misstep might bring the wrath of the agency down upon them. The latest instance of acute ofacaphobia, reported here in an excellent Miami Herald article, involves banks in a panic that travelers to Cuba on one of the general licenses might be fibbing and might really be going to Cuba to drink mojitos in Old Havana and hang out on the beach.

Before travelers can arrive in Cuba, the airline or charter company needs to pay $194 per passenger for landing fees and mandatory health insurance. According to the article, now that passengers self-certify their eligibility under the twelve categories covered by the general license for travel, banks are trying to verify that these self-certifications are accurate, asking for itineraries and other information to assure themselves that they won’t be the next cow in the OFAC abbatoir.

Meanwhile, analysts said perhaps the biggest reason banks are wary of Cuba business are the huge — and recent — fines aimed at banks that have done business with sanctioned countries. Just last month, France’s Crédit Agricole bank paid nearly $800,000 [sic – $800,000,000] to U.S. state and federal agencies to settle allegations it tried to hide or obscure references to transactions involving U.S.-sanctioned nations, including Cuba.

The result has been that travelers arrive at the airport only to learn that they aren’t going to Cuba, that the flight has been cancelled, and that they have to go home because necessary fees had not been transferred by the U.S. banks. Apparently they are so irritated that charter companies have gone to the airport with “police escorts” to deliver the bad news.

This should come as no surprise to OFAC. And there is a simple solution: issue guidance to the banks that they can rely on the traveler’s self-certification of their eligibility under the general license. If Justin Whiteshoes says he’s going to Cuba on a people-to-people tour and is, in fact, going on a bar-to-bar tour, it is going to be Justin Whiteshoes who gets whacked and not the bank that wired his $194 fee to Cuba.

Permalink Comments (1)

Bookmark and Share



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.

Permalink Comments Off on Cuba Sanctions Confuse Miami Television Station

Bookmark and Share



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.

Permalink Comments (1)

Bookmark and Share



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.
Permalink Comments Off on Friday Grab Bag

Bookmark and Share