U.S. REGULATORY OVERSIGHT OVER TRADE AND TRAVEL WITH CUBA BY THE DEPARTMENT OF TREASURY OFFICE OF FOREIGN ASSET CONTROL (OFAC) AND DEPARTMENT OF COMMERCE , BUREAU OF INVESTATIVE SERVICES (BIS)
Trade and travel with or involving Cuba, by individuals, or transactions with a U.S. “Exus”, are regulated by many U.S. Laws. The implementation of those laws is for the most part, administered by “OFAC” and “BIS”.
The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. government charged with planning and execution of economic and trade sanctions it claims are in support of U.S. National security and foreign policy objectives.
Acting under Presidential national emergency powers, OFAC carries out its activities against foreign states deemed to be a POTENTIAL threat to U.S. national security.
OFAC has been in existence for more than a half-century, playing an increasingly significant role as a foreign policy lever of the U.S. government. The agency is empowered to levy significant penalties against entities that defy it, including imposing colossal fines, freezing assets, and altogether barring parties from operating in the U.S. Notably, in 2014, OFAC reached a record $1 billion settlement with the French BNP Paribas, which was a portion of approximately $9 billion penalty imposed in relation to the case as a whole.
Involvement of the U.S. Department of the Treasury in economic sanctions against foreign states dates to the War of 1812 when Secretary Albert Gallatin administered sanctions against Great Britain in retaliation for actions asserted against American sailors.
It’s predecessor, the Division of Foreign Assets Control was established in the Office of International Finance by a Treasury Department order in 1950, following the entry of the the People’s Republic of China into the Korean War; President Harry Truman declared a national emergency and blocked all Chinese and North Korean assets subject to U.S. jurisdiction. In addition to blocking Chinese and North Korean assets, the Division administered certain regulations and orders issued under the amended Trading with the Enemy Act.
The Trading with the enemy Act of 1917 (also known as the Trading with the Enemy Act) (40 Stat. 411, enacted 6 October 1917, codified at 12 U.S.C.§§ 95a–b and 50 U.S.C. App. §§ 1—44), sometimes abbreviated as TWEA, is a United States federal law to restrict trade with countries hostile to the United States. These restrictions continued until January 1, 1975. The Act has been amended several other times.
The Trading with the Enemy Act is often confused with the International Emergency Economic Powers Act, which grants somewhat broader powers to the President, and which is invoked during states of emergency when not at war.
As of 2015, The Republic of Cuba is the only country restricted under the Act. North Korea is the most recent country to have the restrictions lifted.
On October 15, 1962, by a Treasury Department order, the Division of Foreign Assets Control became the Office of Foreign Assets Control.
In addition to the Trading with the Enemy Act and the various national emergencies currently in effect, OFAC derives its authority from a variety of U.S. Federal laws regarding embargoes and economic sanctions. Please see our tab “U.S. Laws & Regs”, for a more complete list.
As an “Embargoed State” under U.S. Law, OFAC asserts jurisdiction over transactions involving Cuba, which has a U.S. “exus”. OFAC regulations are codified in 31 C.F.R. 515, et. Seq. The most recent versionso of those regulations were amended on September 21, 2015, and are contained in the tab “OFAC and BIS”
In enforcing economic sanctions, OFAC acts to prevent “prohibited transactions,” which are described by OFAC as trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute OFAC has the authority to grant exemptions to prohibitions on such transactions, either by issuing a “general license” for certain categories of transactions, or by “specific licenses” issued on a case-by-case basis. OFAC administers and enforces economic sanctions programs against countries, businesses or groups of individuals, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals.
By virtue of the U.S. economic “blockade” against Cuba, it remains on the list of OFAC regulated countries
The Bureau of Industry and Security (BIS) is an agency of the United Sates Department of Commerce that deals with issues involving national security and high technology. The principal goal for the bureau is helping stop proliferation of weapons of mass destruction, while furthering the growth of U.S. exports. The Bureau is led by the Under Secretary of Commerce of Industry and Security.
The mission of the BIS is to advance U.S. national security, foreign policy, and economic interests. As relates to Cuba, BIS’s activities include regulating the export of “sensitive goods” and dual use technologies in enforcing U.S. Export controls particular to Cuba. Those controlled and permitted items are published in the Commerce Control List (CCL) – which includes many goods and technologies as well as economic activity deemed by Congress to require a permit from the Department of Commerce before they can be exported.
To determine whether an export permit is required, an Export Control Classification Number (ECCN) is published by the BIS, and is applicable to U.S. Trade with Cuba. An ECCN is an alphanumeric code assigned to articles, technology and software (collectively, “items”) by BIS. The classification list is a slightly modified version of the list maintained by the Wassenaar Arrangement, an international regime in which member countries agree to implement export controlsfor “dual use” items. Dual use items are items that have potential civilian uses, as well as WMD or conventional weapons related end uses. ECCN classification is determined by referring to a table that is issued by the BIS. Because the lists are based on an international standard, the European Union regulates items using the numbering system that is very similar, and is defined in Council Regulation (EC) 388/2012. However, there are minor differences in the numbering, and the term “ECCN” is specific to the US system. The ECCN table contains hundreds of ECCN codes that are organized according to the technical parameters and/or end use of the hardware, software or technology that is being exported
PLEASE REVIEW THE TAB “U.S. LAW AND REGS” FOR A REVIEW OF APPLICABLE REGS AND LAWS REGARDING CUBA, as well as the tab “OFAC and BIS” to review the most recent changes to those rules.