Cuba Sanctions

U.S. sanctions against Cuba represent a complex and dynamic legal framework that includes the freezing of assets, restrictions on exports and imports, travel limitations, and stringent control over financial transactions. Various U.S. administrations have made amendments to the sanctions regime, ranging from easing to tightening measures, making regulatory compliance both complex and critically important for businesses and individuals. Our legal experts possess unique expertise in navigating these complex federal regulations and are prepared to inform you about U.S. sanctions on Cuba, as well as provide strategic advice so that you can successfully adapt to any changes in U.S. foreign policy and protect your interests.

Cuban Assets Control Regulations

The Cuban Assets Control Regulations (CACR), among the most stringent sanctions regimes in the world, are detailed in 31 CFR 515.101 – 515.901 and constitute a comprehensive legal instrument regulating economic and financial relations between the United States and Cuba. They are aimed at exerting economic pressure on the Cuban government through a wide range of sanction measures. CACR mandates the freezing of all Cuban assets under U.S. jurisdiction, preventing their use and disposal by the Cuban government. The regulations impose strict restrictions on exports and imports, prohibiting the importation of Cuban goods into the U.S. and the export of American products to Cuba, except in cases specifically authorized through OFAC licensing. Financial transactions between U.S. persons and Cuban interests are strictly limited, including bans on wire transfers and investments. Travel by U.S. persons to Cuba is regulated through restrictions to certain categories of authorized travelers.

What are OFAC sanctions on Cuba?

U.S. sanctions on Cuba target the Cuban government since the rise of Fidel Castro, who established a socialist regime and strengthened ties with the Soviet Union. The primary objective of the sanctions is to promote democratic reforms and improve human rights conditions in Cuba. The Treasury Department’s Office of Foreign Assets Control  is responsible for administering and enforcing these measures, which are imposed through presidential Executive Orders (E.O.), such as E.O. 12854 (see Supreme Court case Regan v. Wald, 468 U.S. 222, 224 (1984), where the court affirmed the president’s authority to impose sanctions). The sanctions regime is based on several acts, including the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), 22 U.S.C. §§ 7201-7211; Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), 18 U.S.C. § 2332d; Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, 22 U.S.C. §§ 6021-6091; Cuban Democracy Act of 1992 (CDA), 22 U.S.C. §§ 6001-6010; and Sections 5 and 16 of the Trading With the Enemy Act (TWEA), 50 U.S.C. App. §§ 5, 16.

The history of sanctions dates back to 1962 when President John F. Kennedy expanded sanctions by imposing a comprehensive trade embargo, which remains in effect today. In 1998, the Clinton administration amended Cuban Assets Control Regulations to allow some remittance concessions and eased visa restrictions. The Bush administration also introduced relaxations, expanding the “close relatives” category for travel and increasing the dollar limits for carry-ons. The Obama administration took significant steps to ease the embargo against Cuba, including lifting travel restrictions and financial assistance for U.S. residents visiting relatives on the island, as well as expanding opportunities for American companies to provide telecommunications services in Cuba. Subsequent years saw additional amendments that facilitated educational and religious exchanges, increased the amount of allowed remittances, and permitted the opening of accounts in Cuban banks to facilitate financial transactions. The Trump administration adopted a more conservative approach to U.S.-Cuba relations, reducing opportunities for educational exchanges and imposing restrictions on accommodations in certain hotels. U-Turn transactions were also eliminated, and non-family remittances were prohibited. Under the Biden administration, changes were made to increase support for the Cuban people, including the authorization of group educational trips, lifting restrictions on academic events, removing the $1,000 limit on family remittances, and allowing donative remittances to Cuba.

Currently, sanctions imposed by OFAC on Cuba include strict limitations on travel by U.S. citizens to Cuba. Travel is regulated through a licensing system and is permitted only for certain categories. Tourist travel is strictly prohibited, and U.S. persons must meet the requirements set for each travel category, providing the necessary documentation and reports to verify the purpose of their visit.

At the same time, the trade and financial sanctions administered by OFAC impose strict restrictions on the export and import of goods between the U.S. and Cuba (prior to sanctions, Cuba had significant trade with the U.S.: 59% export to the U.S. and 76% import from the U.S.), except for those cases specifically authorized through the issuance of licenses. This applies to import and export operations, including certain goods and services, for which exceptions may be made, such as for humanitarian aid or medical products. Financial sanctions restrict banking operations and investments, including bans on providing credit and other financing to Cuban entities, as well as control over transfers and distribution of funds. Certain transactions require obtaining OFAC general or specific licenses.

Restrictions on Travel

For more detailed information, see our article Cuba Travel Sanctions.

Sanctions imposed by the OFAC on Cuba include a range of strict restrictions concerning travel by U.S. citizens to the island, as prescribed in 31 CFR § 515.560, which explicitly prohibits tourist travel to Cuba for U.S. citizens. According to this provision, all travel must fall under one of the twelve authorized categories to establish a legal basis for such visits:

Trade and Financial Sanctions

Trade sanctions are a key element of the U.S. embargo against Cuba, prohibiting most commercial transactions and economic interactions. This embargo is based on the Trading with the Enemy Act and the Foreign Assistance Act, which prohibit assistance to countries that have nationalized American property without compensation (Section 620(a), 22 U.S.C. § 2370(a)). Despite these restrictions, the United States continues to export certain goods to Cuba, including food and some medical devices and supplies, under exceptions provided for humanitarian considerations. This is regulated in part by the Trade Sanctions Reform and Export Enhancement Act (TSRA), which requires licenses from the U.S. Department of Commerce for the export of dual-use items such as telecommunications equipment and commercial aircraft. The import of Cuban goods into the U.S. remains largely prohibited.

From a financial perspective, sanctions include strict restrictions on banking and financial operations with Cuba. OFAC regulates these transactions under Cuban Assets Control Regulations, 31 CFR Part 515. Recent changes include the termination of permissions for “U-turn” transactions, which allowed foreign banks to use the U.S. financial system for processing international transfers, provided the funds did not remain in the United States. In July 2023, the U.S. Treasury Department also announced the imposition of additional restrictions aimed at blocking Cuba’s access to cryptocurrencies and other digital assets to prevent circumvention of sanctions and reduce financial flows supporting the Cuban government.

Penalties for Cuba Assets Control Regulations Violations

Violations of Cuban Assets Control Regulations can have serious consequences for both individuals and legal entities, with criminal penalties ranging up to 10 years in prison, $1 million in corporate fines, and $250,000 in individual fines. In addition to these, civil penalties can be as much as $65,000 per violation. For example, in 2019, OFAC imposed a fine of $1,869,144 on Stanley Black & Decker for actions by its subsidiary, which supplied products to Cuba through third countries. This violation occurred due to insufficient internal controls and oversight despite the existing sanctions regime. In cases of intentional and serious Cuban Assets Control Regulations violations, criminal cases may be initiated, including prison terms. In 2016, CGG Services S.A. agreed to pay $614,250 to settle potential liability for violations related to transactions involving Cuban oil tankers. Criminal cases may be initiated by the U.S. Department of Justice following OFAC investigations and the provision of evidence of willful violations. Companies and individuals doing business with Cuba must carefully comply with Cuban Assets Control Regulations requirements and other U.S. sanctions regulations.

Consultation with sanctions law attorneys can help minimize the risk of violations and avoid severe penalties. Violating Cuban Assets Control Regulations can have long-term consequences for businesses, including reputational risks and restrictions on access to U.S. financial markets.

Importing and Exporting Goods to/from Cuba

The import of Cuban goods into the United States, including tobacco and alcohol, is generally prohibited under 31 CFR 515.204, except in cases specifically authorized by OFAC. The export of goods from the United States to Cuba under 31 CFR 515.533 is permitted subject to certain conditions. First, all transactions related to exports must be licensed or otherwise authorized by the U.S. Department of Commerce under the Export Control Act of 1979 and relevant regulations (15 CFR parts 730-774). This ensures that exports or reexports of goods are conducted in accordance with U.S. national security and foreign policy. Second, transactions cannot be related to the export of goods to Cuba manufactured in countries other than the United States or Cuba by U.S.-owned or controlled firms located in third countries. This provision aims to prevent the circumvention of sanctions through companies operating outside the U.S. Third, financing of such operations cannot be conducted through blocked accounts. This requirement prevents the use of funds frozen under U.S. sanctions to finance export operations.

Regarding agricultural products, only two types of payments and financing are allowed. The first option is prepayment, which requires that the buyer in Cuba make payment before taking possession and control of the exported goods produced. The second option is financing through banking institutions located in third countries, provided that such banks are not U.S. persons, U.S. permanent residents, or entities incorporated in the United States.

It is also important to note that all transactions directly related to the transportation of goods, such as insurance and shipping, are also allowed if they are directly related to specific shipments to Cuba. However, operations not related to specific shipments require separate OFAC authorization.

In addition, the export or reexport of agricultural products and medical goods exported to Cuba is regulated by the Trade Sanctions Reform and Export Enhancement Act of 2000.

OFAC Traveling Licenses to Cuba

General License

A General License is an authorization issued by OFAC that allows individuals and entities in the U.S. to engage in certain activities that would otherwise be prohibited by sanctions, without the need to obtain individual permission. General Licenses are published in the Federal Register and on the OFAC website, specifying the particular categories of authorized activities and the conditions under which these activities may be conducted.

Does one need further permission from OFAC to act under a general license?

No, further permission from OFAC is not required to act under a General License. However, it is important to strictly adhere to the conditions and limitations set forth in the General License, as failure to comply with these conditions may lead to sanctions violations and corresponding consequences.

What is required of a person acting under a general license in the event of an OFAC investigation?

In the event of an OFAC investigation, a person or organization acting under a General License must be prepared to provide documentation proving that their activities complied with the conditions of the General License. This may include transaction records, internal compliance policies, and other information demonstrating adherence to the general or specific license’ terms.

How can an attorney help in this case?

An attorney can provide legal advice on compliance with OFAC requirements of a General License and sanctions law. They can help clarify the conditions and restrictions provided by the license, as well as develop internal policies and procedures to ensure compliance with sanctions. In the event of an investigation, an attorney can represent the client’s interests, prepare necessary documentation, and assist in communications with OFAC.

What are some of the activities that a general license may cover?

A General License may cover a wide range of activities, including the export of certain goods and services, financial transactions related to humanitarian aid, educational and cultural exchanges, as well as certain types of travel to Cuba. For example, it may allow the export of agricultural products and medical goods to Cuba subject to certain conditions or travel related to educational exchanges.

Who can engage in Cuba travel-related transactions under a general license according to the Cuba sanctions program?

Under the Cuba sanctions program, a General License allows for travel-related transactions in 12 categories: Family Visits; Official Business of the U.S. Government, Foreign Governments, and Certain Intergovernmental Organizations; Journalistic Activities in Cuba; Professional Research and Professional Meetings in Cuba; Educational Activities; Religious Activities in Cuba; Public Performances, Clinics, Workshops, Athletic and Other Competitions, and Exhibitions in Cuba; Supporting the Cuban People; Humanitarian Projects in Cuba; Activities of Private Foundations and Research or Educational Institutes; Information Exchange and Media Productions; Exportations from the United States to Cuba; Reexportations to Cuba; and the Importation, Servicing, or Repair of Certain Items Previously Exported or Reexported to Cuba.

Which officials are permitted to travel to Cuba on official business under a general license?

Under a General License, U.S. government officials and employees of certain international organizations, such as the United Nations, NATO, WTO, IMF, World Bank, OECD, G7, G20, APEC, OAS, WHO, FAO, IAEA, Interpol, ITU, WIPO, ICANN, OSCE, ICAO, ILO, UNICEF, UNEP, UNHCR, UNESCO, or AU, SAARC, ASEAN, OIC, SICA, CERN, NAM, PIF, may travel to Cuba to perform their official duties.

Specific License

A Specific License is an individual authorization issued by OFAC, allowing specific individuals or organizations to engage in certain activities otherwise prohibited by sanctions. These licenses are granted based on individual applications and require a detailed review process, which typically takes up to one year.

How are specific licenses different from general licenses?

Specific licenses differ from General Licenses in that they are not published by OFAC or made publicly available and require the submission of an application and approval by OFAC for each specific case. In contrast, General Licenses automatically apply to all individuals or organizations that meet the conditions without needing an application.

What must an applicant include in their application for a specific license to OFAC?

When applying for a specific license to OFAC, the applicant must:

• Provide a detailed description of the transactions or activities for which the license is required, specifying all parties involved in the process.
• Explain the reasons why the applicant believes the activity should be authorized, including any information supporting its humanitarian, educational, or other significant benefits.
• Provide detailed information about all participants in the transaction, including their names, addresses, and citizenship.
• Submit any additional documentation that may support the justification and legality of the proposed activity.

Applications can be submitted online through the OFAC License Application Page or by sending physical documents to OFAC at:

Office of Foreign Assets Control
U.S. Department of the Treasury
Treasury Annex / Freedman’s Bank Building
1500 Pennsylvania Avenue, NW
Washington, DC 20220

On what basis are specific licenses issued?

Specific licenses are issued based on individual review and evaluation of the submitted information. OFAC considers the alignment of the proposed activities with U.S. national security and foreign policy interests, as well as humanitarian and economic considerations. Licenses may be granted if the activities promote democratic reforms or have significant humanitarian importance.

For what activities might Americans or American entities need a specific license to engage in Cuba travel-related transactions?

Americans or American entities may need a specific license for travel-related activities that do not fall under categories authorized by general licenses. We have assisted in obtaining OFAC Specific Licenses for:

1. An American company planning to enter into an agreement with a Cuban state enterprise for infrastructure construction or mineral resource development, which required an OFAC Specific License due to the scope beyond standard business travel.
2. A U.S. scientist conducting extensive research on Cuban flora and fauna, involving the use of laboratories in Cuba and data exchange with local scientific institutions.
3. A journalist spending several months in Cuba filming a documentary about the country’s socio-economic changes, including access to government facilities and institutions.
4. A U.S. technology company testing new renewable energy equipment in Cuba, requiring an OFAC Specific License for the project due to the use of dual-use equipment and advanced technologies.
5. A U.S. organization hosting a cultural festival in Cuba featuring international artists and special guests.
6. A U.S. non-governmental organization implementing a long-term medical aid program, including the supply and installation of medical equipment in Cuba.
7. An American environmental group collaborating with Cuban authorities on a coral reef conservation project.

OFAC-Authorized Travel Methods

Legal travel to Cuba is possible through Carrier Service Providers (CSPs) and Travel Service Providers (TSPs), which ensure compliance with Cuban Assets Control Regulations  and minimize risks for travelers in the 12 authorized categories. Travel to Cuba often uses the category Support for the Cuban People, including activities that directly support the local population, such as staying in private homes (casas particulares) and participating in cultural exchanges.

Can you Send Money to Cuba?

Yes. The sending of money to Cuba is regulated by 31 CFR 515.570.

Individuals over the age of 18 under U.S. jurisdiction can send money to close relatives in Cuba. These transfers cannot come from blocked sources and must not be directed to prohibited officials of the Cuban government or members of the Communist Party. Charitable donations to Cuban nationals are also permitted, provided that the recipients are not prohibited officials or party members.

Americans can send money to religious organizations in Cuba to support religious activities. Funds can be transferred to relatives who are students in Cuba if they are participating in educational programs authorized by a license. Two one-time transfers of up to $1,000 are allowed to cover expenses related to emigration from Cuba to the United States, including visa and other immigration costs. Transfers from blocked sources are also permitted under certain conditions, such as bequeathed funds being transferred to a Cuban national. Transfers are allowed to support humanitarian projects, democratic groups, and the private sector in Cuba.

Transfers cannot be directed to organizations listed on the Cuba Restricted List and cannot be used for investments in Cuba. All transactions must comply with OFAC requirements and not violate established restrictions.

Facing issues regarding Cuba Sanctions OFAC?

If you encounter difficulties with sanctions compliance, our sanctions attorneys have extensive experience and are ready to offer comprehensive solutions for businesses and individuals. We provide professional legal assistance and advice to minimize risks and ensure legal compliance. Contact us for consultation and legal support.