Archive for the ‘Cuba Sanctions’ Category


Jan

10

Homeless Travel Blogger Advises Readers To Violate OFAC Rules


Posted by at 6:03 pm on January 10, 2017
Category: Cuba SanctionsOFAC

Ben Schlappig via http://onemileatatime.img.boardingarea.com/wp-content/uploads/2008/01/Ben-Schlappig-10bw-cropped-e1427813265841.jpg [Fair Use]
ABOVE: Ben “Lucky” Schlappig

A homeless blogger named Ben “Lucky” Schlappig, who makes his living flying on airplanes and staying in hotels, has decided to take up the practice of law along with advising fellow travelers on the intricacies of the airline and hotel reward programs. The result is pretty much what you would expect when Lucky opines on the legality of traveling to Cuba as a tourist.

Technically Americans can only travel to Cuba for one of about a dozen approved reasons. … In practice, most people traveling to Cuba as tourists choose either “Support For The Cuban People” or “People-To-People Exchanges” as the reason for visiting.

So technically you can’t go if tourism is your stated reasons [sic], though in practice there are tens of thousands of American tourists going. That’s because they keep the categories intentionally broad, and you won’t generally be asked about the details of why you’re going to Cuba. Arguably when you’re a tourist somewhere you have “people-to-people exchanges” and also “provide support” to the people.

Without hesitation I’d feel comfortable recommending people visit Cuba as tourists and just state one of those as the reasons.

Arguably, when you’re relying on a pretend lawyer, your mileage may vary.  Also, never trust anyone who goes by the name of “Lucky.”

Of course, OFAC anticipated that amateur lawyers like Lucky would say that all tourism in Cuba was inherently a people-to-people exchange, so it gave an example here, in the actual rules (which Lucky clearly did not bother to read), to put the kibosh on such silliness:

An individual plans to travel to Cuba to rent a bicycle to explore the streets of Havana, engage in brief exchanges with shopkeepers while making purchases, and have casual conversations with waiters at restaurants and hotel staff. None of these activities are educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba, and the traveler’s trip does not qualify for the general license.

So, just as you should not trust my opinions on how to get the most frequent flyer miles from your airline, you probably shouldn’t trust Lucky when he tells you to travel to Cuba as a tourist.

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

Dec

22

How the OFAC Gave Back Christmas


Posted by at 8:19 am on December 22, 2016
Category: Cuba SanctionsOFAC

Santa Flanked by F-16

Before leaving for the holidays, I thought it would be appropriate to repost the good news that we received earlier this year regarding Santa’s annual toy delivery being finally released from OFAC restrictions on his route.

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, eemcelfface@gmail.com 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.

I hope all Export Law Blog readers are able to take some time off and enjoy the holidays with their family and friends. See you in 2017!

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Oct

24

Just What Part of “Executory” Don’t You Understand?


Posted by at 3:22 pm on October 24, 2016
Category: Cuba SanctionsOFAC

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]A lawyer at another DC firm is having a conniption fit over the part of the new Cuba regulations that authorizes U.S. persons to enter into executory contracts in Cuba that are contingent upon OFAC approval. He apparently thinks that this goes to the “core” of the embargo and that OFAC is overstepping its authority as circumscribed by section 102 of the Helms-Burton Act and, although he does not cite it, section 204 of that same act.

We’ve all been through this before: section 204 applies only if the President seeks to “end” the embargo. As long as imports of chia pets and thermal underwear from Cuba are prohibited, the embargo has not been ended, which leaves OFAC and the White House pretty much free to do what they want in this regard.

Section 102, which is the provision relied on here by the lawyer in question, codifies the Cuban Assets Control Regulations in effect as of the date of the law’s enactment. But those regulations, in section 515.201, specifically provide that everything prohibited by the regulations may be “authorized by the Secretary of the Treasury (or any person, agency, or instrumentality designated by him) by means of regulations, rulings, instructions, licenses, or otherwise.” So, once again, OFAC can pretty much promulgate general licenses and regulations to its heart’s content. Whether it was Mr. Helms or Mr. Burton who left open this truck-height loophole doesn’t really matter.

Leaving aside the broader issue of authority, the blog post criticizing OFAC’s new rules on executory contracts somehow thinks that this rule goes to the “core” of the embargo — but why that is the case is far from clear. The author thinks that the problem arises because the executory contract is somehow or other a “dealing” in the property of a Cuban national. Now granted, OFAC has previously interpreted dealing in such a broad fashion that someone who just thinks about buying a vacation casa in Cuba has probably violated the rules. But, in an actual universe where people speak a language where words have a circumscribed meaning, it seems clear that a contract that says it isn’t dealing in property until OFAC says its okay to deal in that property, isn’t “dealing” in that property. Thus, OFAC can issue this regulation on executory contracts without violating statutory prohibitions  because an executory contract can legitimately be seen as not dealing in the property in question, because this regulation has not ended the embargo and because it remains consistent with the authority that Congress gave OFAC in section 102 of the Helms-Burton Act to authorize whatever it wants by regulations and licenses.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Oct

14

North Pole Praises Today’s OFAC Actions


Posted by at 4:27 pm on October 14, 2016
Category: BISCuba SanctionsOFAC

Santa Flanked by F-16

The following just arrived in my email:

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, eemcelfface@gmail.com 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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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Sep

29

I’ll See You in C.U.B.A.


Posted by at 9:41 pm on September 29, 2016
Category: Cuba SanctionsOFAC

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]Several people have been wondering if I would write something about the allegation that Trump may have violated the Cuban embargo back in 1998. This blog expresses no opinion on political campaigns or figures, so I hesitate to wade into this other than as an opportunity to talk about how the Cuban sanctions are structured. So, for purposes of this post, I will take as hypothetically true for discussion the allegation, which has not been admitted by the Trump campaign, that in 1998 Trump asked consultants to go to Cuba on his company’s behalf to explore business opportunities there and that he later reimbursed their travel.

To begin with, it has to be observed that there is a five year statute of limitations on criminal and civil penalties related to the Cuba embargo. As a result, the possibility of a criminal prosecution or civil penalties if there was a violation, has long past.

The relevant prohibition of the Cuba sanctions is the oddly phrased prohibition in section 515.201 of the Cuban Assets Control Regulations. That section prohibits any person “subject to the jurisdiction of the United States” from engaging in specified transactions that “involve property in which [Cuba], or any national thereof, has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect.” Those specified transactions are transfers through banking institutions, foreign exchange transactions, dealings in property and transfers of property outside the United States.

So the first question is whether asking consultants to go to Cuba to explore business opportunities there for your company violates that. Certainly when in Cuba, those consultants will have dealings in property in which Cubans have an interest — they’ll do that the minute they check into a hotel or drink a mojito. But does the U.S. person who simply asks them to go to Cuba by that request transfer anything through banks, engage in a foreign exchange transaction, deal in property or transfer property outside the United States? It would not seem so, which makes it hard to see a violation of this rule as written by sending consultants to Cuba.

The second question is whether the language in section 515.201 prohibits somebody from reimbursing the travel expenses of someone who has traveled to Cuba. It seems to me that there is a good argument that it does not. Unlike the mere travel request, this reimbursement transaction does involve dealing in property as well as a banking transaction.  But it’s hard to see that it involves any property in which a Cuban has or had an interest. No Cuban has any interest in the money paid to the traveler after he has left Cuba and has already made payments to hotels and restaurants in Cuba.  And that money seems to be the only property involved in the transaction. Clearly, the consultants engaged in one of the specified transactions involving Cuban property when they paid the hotel bill in Cuba, but it’s not so clear that, once the hotel was paid, any Cuban has or had any interest in the money used later to reimburse the traveler.

That being said, let me say that OFAC, which enforces these rules, takes the position that the reimbursement somehow or other does “involve” the Cuban hotel, which is, by my view, something like saying the butterfly that spreads its wings in Africa is involved in the hurricane that slams into the Outer Banks. In the end, of course, OFAC’s opinion, even if I think it stretches the meaning of “involve,” will control.

But, you say, since the consultants are violating the Cuban embargo, would Trump, if he sent them to Cuba and reimbursed them, have violated the embargo by conspiring with them or by aiding and abetting them in the violation of the sanctions? That is not clear either. The penalties established for violations of the Cuban embargo are set forth in section 501.701  That section prohibits and penalizes violations of the rules but does not include a penalty for aiding and abetting a violation, conspiring with someone to violate or causing a violation. This is in contradistinction to the parallel provision in the Iran sanctions, for example, which punishes anyone who “violates, attempts to violate, conspires to violate, or causes a violation” of the rules.

Again, I have to be clear that OFAC is not troubled by the niceties of the language of the Cuban embargo rules themselves, but would unambigously take the position that both sending the consultants to Cuba and the reimbursement of their travel expenses after they return, if that in fact occurred, would violate the Cuban sanctions.  So, kids, don’t try this at home.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)