Archive for the ‘Cuba Sanctions’ Category


Dec

24

Reduced Sleigh Team Jeopardizes Christmas in the United States


Posted by at 9:56 am on December 24, 2018
Category: Cuba SanctionsOFAC

Santa Flanked by F-16

BREAKING NEWS: North Pole spokeself Mr. Elf E. McElfface contacted Export Law Blog with unsettling information. Apparently Donner and Blitzen are under the weather meaning that Santa will have to make his annual Christmas Eve run with six reindeer instead of his normal complement of eight. As readers will recall from the Press Release posted below back in 2016, OFAC’s rules were amended to permit Santa to visit both the United States and Cuba, provided that he went to Cuba first and only gave Cuban children EAR99 gifts. Otherwise, he would be landing in the United States with a sleigh containing toys in which Cuban children had an interest in violation of section 515.207(b) which was not waived by section 515.550(b).

Santa is concerned that requiring the reindeer to fly over the United States from the North Pole to Cuba and then back to the United States will unduly strain the six reindeer that will be making the run. Mr. McElfface pointed out that none of us, including the reindeer who are somewhere around three hundred years old (except for Rudolph who is 262 years old), are getting any younger. So, although Santa and the six healthy reindeer will do their best under these constraints, children in the United States should be prepared that this year there may be nothing (not even a lump of coal) under the tree for them. A GoFundMe campaign is in the works to purchase several tons of coal to be delivered to OFAC should any U.S. children be impacted by OFAC’s Cuba First rules for Santa.

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, [email protected] or (951) 262-3062

Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.

Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys — which are not food, medicine, or personal communications devices — could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT—Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.

News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.

As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.

This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

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Aug

29

Newsweek Gets Confused by OFAC Travel Rules


Posted by at 8:28 am on August 29, 2018
Category: Cuba SanctionsOFAC

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]Last week the State Department changed its travel advisory on Cuba from “reconsider travel” to “exercise increased caution.”  The “reconsider travel” warning was apparently based on the sonic attacks on diplomats in Cuba.  The decision to change to “exercise increased caution” came after the State Department concluded that sonic attacks on private U.S. citizens was unlikely.

Still this business of travel warnings appear to have little, if any, relation to the actual safety of the destination.  There are no warnings about the safety of travel to Belize even though between 2009 and 2016, 16 Americans were murdered in Belize.  That put Belize as the seventh most dangerous country for Americans as measured by its  death rate of 1.02 per 100,000 American tourists.  During that same period, only two people were killed in Cuba giving it a death rate of 0.08 per 100,000 American tourists, approximately 12 times lower than that of Belize.  Of course, given the U.S. homicide rate of  5.3 per 100,000, it’s probably safer to travel to Cuba, or even Belize, than to stay home in the United States.

A number of news sites commented on this change.  But one of them, namely Newsweek, caught my eye when it decided to add this statement about travel to Cuba:

 The only legal way for U.S. citizens to travel there is by applying to the Treasury Department’s Office of Foreign Assets Control for a license under one of 12 categories of travel.

Good grief.  Is Google not working at Newsweek these days?  Those twelve categories mentioned in the quote are for general licenses, you know, the ones that do not require a specific OFAC license application.  In case the Newsweek reporter wanders by and reads this post, here is the link to the OFAC regulation noting that general licenses are available for each of those categories.

So, as you’ve heard before, don’t believe everything you read on the Internet unless, of course, you read it here.

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Apr

11

Cuba Export Indictment Mangles U.S. Export Laws


Posted by at 6:27 pm on April 11, 2018
Category: BISCriminal PenaltiesCuba Sanctions

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]Last week Bryan Singer, a Texas resident, was indicted for attempting to export to Cuba certain items that U.S. Customs found on his boat in a harbor in the Florida keys. The items are involved are Ubiquiti Nanostation M2 modems classified as 5A002, TP Link modems classified as 5A992 and cable box circuit boards classified as EAR99. The brief indictment states that Singer did not obtain a license from “DOC or OFAC” to export these items to Cuba. It also notes that he failed to file an Electronic Export Information covering the export of these items.

There is supposed to be an adult at the Export Enforcement Coordination Center who reviews these export indictments, but that would appear not to be the case. To begin with, two of the items mentioned in the indictment, the TP Link Modems and the cable box circuit boards, were eligible for license exceptions and would not have needed licenses. The TP Link modems are a no brainer and are clearly covered by BIS License Exception CCD. The EAR99 cable circuit boards if they went to private companies or private individuals probably were eligible for export under License Exception SCP. Mr. Singer says in press reports that he was relying on that exemption, and nothing in the indictment alleges that the intended export did not qualify for License Exception SCP.

So that leaves the 5A002 Ubiquiti modems, which would not have been eligible under either License Exception CCD or License Exception SCP. Of course, when the government itself does not understand the export laws (witness including the TP Link modem in the indictment), it is hard for it to establish that Singer had criminal intent when he apparently thought, albeit incorrectly, that he could send the Ubiquiti modem to private individuals in Cuba.

The indictment’s efforts to cobble together a violation due to the failure to file an EEI are equally unavailing. No allegation is made, or proof offered, that items with the same Schedule B number in the shipment had a total value of $2500 or more. Under section 30.37(a) of the Foreign Trade Regulations no EEI was required if that were not the case. And it seems clear that these values weren’t met. The Ubiquiti and TP Link modems share the same schedule B number (8517.62), but given that the Ubiquiti modem retails for 50 bucks and the TP Modems were probably close to that, we would be talking about 50 or more of them needed before an EEI was required. And it’s hard to imagine that the cable circuit boards, which would have a different Schedule B number, were worth more than $2500. So, once again, if the AUSA who signed this indictment can’t figure out the law, how can he criminally prosecute Mr. Singer for not understanding it?

UPDATE: A reader notes in the comments below:

On the EEI issue, section 30.37(a) has no bearing on shipments to Cuba, as it’s in Country Group E:2. The only exceptions that apply are those in section 30.37(y). If none of those apply, then an EEI filing is required under section 30.16(d).

The FTR is poorly drafted here, so I’m not sure I agree. Section 30.7(a) does not say anything like “except as otherwise provided in 30.7(y).” Nor does section 30.7(y), which sets forth certain conditions where exports to E:2 countries do not require an EEI filing, state that these are the only situations where an EEI filing is not required, notwithstanding other exceptions set forth in section 30.7. I admit that the reader’s interpretation is one possible interpretation, but certainly give the plain language of 30.7(a) which does not limit its application creates too much ambiguity to support a criminal prosecution. Additionally, if the CCD-eligible items qualified under License Exception GFT, which is possible here, even 30.7(y) by its own terms would not be relevant.

The EAR, in section 758.1 is clearer about the $2500 threshhold not applying to Cuba, although that provision is not cited by the indictment, which only cites 30.37 of the FTR.  But that section doesn’t alter the availability of an EEI exemption for exports to Cuba of CCD items made under the GFT exception.

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Dec

1

OFAC Fines Foreign Company for Following Applicable Foreign Law


Posted by at 8:41 am on December 1, 2017
Category: Cuba SanctionsForeign CountermeasuresGeneralOFAC

American Express Office in Rome, image by User Mattes [CC-BY-3.0] (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File:American_Express_office_in_Rome.jpgThe Office of Foreign Assets Control (“OFAC”) recently announced that it has extracted $204,277 from American Express as a result of 1,818 credit card transactions in the amount of $583,649.43 for purchases made in Cuba. At issue were Mastercard and Visa corporate credit cards issued by BCC Corporate SA to corporations for use by the employees of those corporations, which cards were then used by those employees to make the Cuban purchases that were at issue.. BCC is a wholly-owned Belgian subsidiary of Alpha Card Group, another Belgian company  and a 50/50 joint venture of BNP Paribas Fortis and American Express.

The immediate question here, which OFAC can’t be bothered to answer, is how OFAC has the authority to fine a Belgian company for its dealings with Cuba. The Cuban Assets Control Regulations prohibit Cuba transactions by persons “subject to the jurisdiction of the United States.” Section 515.329 of the CACR define persons subject to the jurisdiction of the United States to include companies “owned or controlled” by a corporation organized under the laws of the United States

The CACR does not define “owned or controlled.”  That’s probably because everyone — except apparently OFAC — understands what that means, namely that the U.S. company owns 100 percent of the company or some lesser amount coupled with de jure or de facto control. In the case of a 50/50 joint venture neither party owns or controls the venture.  (Owned in this context cannot mean any interest, no matter the size, since that would render the addition of “or controlled” unnecessary).

To make matters worse, OFAC is — yet again – punishing a company for complying with applicable foreign law.   Anyone who reads this blog knows that I have pointed out time and time again that it is illegal for companies doing business in the European Union. Council Regulation (EC) No 2271/96 of 22 November 1996 prohibits companies incorporated in the E.U., such as BCC Corporate SA, from complying with the U.S. embargo on Cuba. OFAC does not, of course, mention BCC’s obligation to comply with local law or even cite it as a mitigating factor here. This is particularly egregious where the company at issue is not even subject to U.S. jurisdiction.

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(No republication, syndication or use permitted without my consent.)

Nov

9

When You Might Not Be Libre To Drink a Cuba Libre in Cuba


Posted by at 6:02 pm on November 9, 2017
Category: Cuba SanctionsOFAC

Tropi Cola by Markus L [CC-BY-NC-2.0 (https://creativecommons.org/licenses/by-nc/2.0/)], via Flickr https://flic.kr/p/egCzwi [cropped and processed]One of the things that pops out from the State Department’s Naughty List of Cuban businesses is all the beverage companies on it, which seems odd. I mean, honestly, how much can American tourists spend on TropiCola? How much of that will wind up in the pockets of Cuban spies and the Cuban military? Is the Cuban military going to crumble when it can’t sell TropiCola to American tourists?

On the list are Najita (orange soda), Cachito (sparkling lemonade), TropiCola, and rum producers Ron Caney and Ron Varadero. Havana Club Rum, the gold standard of Cuban rum, is, inexplicably, not on the Naughty List.

The relevant regulation here is the new section 515.209 of the Cuban Assets Control Regulations (“CACR”) which forbids “direct financial transactions” with any entity on the Naughty List. But don’t pin your hopes on the word “direct” because we’re talking OFAC here and we’re in the Upside Down where direct actually means indirect. When you buy TropiCola from a street vendor, that’s a direct transaction in the Upside Down where OFAC lives and an indirect transaction in the normal world.

For purposes of this prohibition, a person engages in a direct financial transaction by acting as the originator on a transfer of funds whose ultimate beneficiary is an entity or subentity on the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List”) … , including a transaction by wire transfer, credit card, check, or payment of cash.

So, when you give cash to bar in Havana to purchase a Cuba Libre made with Caney Rum and TropiCola, the ultimate beneficiaries are, arguably, TropiCola and Ron Caney. Perhaps an argument could be made that since both companies have already been paid, they aren’t the ultimate beneficiary of your payment to the bar. But, if section 515.209 of the CACR only applies when you buy Tropicola or Caney Rum directly from the bottler, why include them on the Naughty List? What U.S. tourist will ever deal directly with the bottler?

And since we made a trip to the Upside Down, I am compelled to add one thing: #JusticeForBob (spoiler alert!).

Photo Credit: Tropi Cola by Markus L [CC-BY-NC-2.0 (https://creativecommons.org/licenses/by-nc/2.0/)], via Flickr https://flic.kr/p/egCzwi [cropped and processed]. Copyright 2010 Markus L

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)