New Cuba Travel and Trade Regulations Issued--Targeted Shrinkage of the Scope of Normalization Continues

(Pix © Larry Catá Backer 2017)

Those interested in the state of relations between the United States and Cuba have been awaiting the issuance of the modifications to the regulations that implement the ancient U.S. trade embargo ever since President Trump announced a change in direction of U.S.-Cuba relations int he Spring (e.g., here, here, here, and here).

Where once the entire focus of these changes were on a "better deal" compatible with the foreign trade and relations theme of the early Trump Administration (e.g., Remarks by the President on the Policy of the United States Toward Cuba (delivered in Miami June 16th)), those objectives have been flavored now by the Affair of the Sonic Weapons Attack. It appears that Cuba remains a special case, one where the economic interests of the United States may play a secondary role--or better put in today's terms, one in which the "better deal" produces a marketplace in the the United States is willing to barter economics for politic objectives. That may or may not be error--only time will tell.  But it does represent the continuation of our quite singular relations with this state.    

They have now been released. The new regulations do not entirely roll back the state of relations (or travel-investment), they point to a return to the status quo of the turn of the century, refined by much more specific targeting of persons and institutions of Cuba. That targeting goes to the core of the Cuban 2030 Development plan's focus on tourism (and less so on infrastructure and pharma). There is irony here, this technique, refined and used well against the Russians and others by the Obama administration, continues to be expanded as a tool of U.S. foreign policy in the era of the "better deal." Of course, the Devil is in the detail.  There are some potentially substantial loopholes for U.S: travelers and investors, and some invitations toward creative enterprise organization for Cuba.  There is much work for lawyers here and likely some creativity in opening loopholes wider on one side and in (after the fact) loophole closing by the government. Intermediaries (lawyers, accountants, etc.) are likely to be the greatest beneficiaries of these rules.

The new regulations adhere closely to Executive Order directing their creation (National Security Presidential Memorandum  5; Strengthening the Policy of the United States Toward Cuba (NSPM 5 in Federal Register) (June 16, 2017)).  Below please find first the Department of the Treasury's summary of major elements of the changes,  second, the BIS regulations,  and third, the much longer OFAC Regulations. 

Downloading: For the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR) part 515, see here. For the Commerce regulations, which can be found at 15 CFR parts 730-774, see here. For the State Department list, which can be found on the State Department website and in the Federal Register, see here.

 

U.S. Department of the Treasury
Treasury, Commerce, and State Implement Changes to the CubaSanctions Rules

Amendments Implement President Trump’s June 2017 National Security Presidential Memorandum (NSPM) Strengthening the Policy of the United States Toward Cuba

WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) are announcing amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively, to implement changes to the Cuba sanctions program announced by the President in June. The State Department is taking complementary steps to implement these policy changes that cumulatively seek to channel economic activities away from the Cuban military, intelligence, and security services, while maintaining opportunities for Americans to engage in authorized travel to Cuba and support the private, small business sector in Cuba. The changes will take effect on Thursday, November 9, 2017, when the regulations are published in the Federal Register.

“We have strengthened our Cuba policies to channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people,” said Treasury Secretary Steven Mnuchin.

For the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR) part 515, see here. For the Commerce regulations, which can be found at 15 CFR parts 730-774, see here. For the State Department list, which can be found on the State Department website and in the Federal Register, see here. Major elements of the changes in the revised regulations include:

Financial Transactions

• ➥  In accordance with the NSPM, the State Department is publishing a list of entities and subentities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel and with which direct financial transactions would disproportionately benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba – the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List”). The Cuba Restricted List is maintained by the State Department and will be published and periodically updated as necessary in the Federal Register.

• ➥   Persons subject to U.S. jurisdiction will now be prohibited from engaging in certain direct financial transactions with entities and subentities identified by the State Department on the Cuba Restricted List. Certain transactions will be excluded from this prohibition pursuant to exceptions detailed in the NSPM.

• ➥   Consistent with the Administration’s interest in avoiding negative impacts on American businesses and travelers, commercial engagements in place prior to the State Department’s listing of any entity or subentity will continue to be authorized, as will most previously arranged travel. For example, businesses will be permitted to continue transactions outlined in contingent or other types of contractual arrangements agreed to prior to the issuance of the new regulations, consistent with other regulatory authorizations.
  Trade and Commerce
  

• ➥   In accordance with the NSPM, BIS is establishing a general policy of denial for license applications to export items for use by entities and subentities on the Cuba Restricted List unless the transaction is otherwise consistent with the NSPM.
  

• ➥  Consistent with the Administration’s policy to support free enterprise in Cuba, BIS is simplifying and expanding its license exception that authorizes certain license-free exports to the Cuban private sector.
  People-to-People Travel
  

• ➥   In accordance with the NSPM, OFAC is requiring that (1) all people-to-people nonacademic educational travel be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, and (2) such travelers be accompanied by a person subject to U.S. jurisdiction who is a representative of the sponsoring organization. Individual people-to-people nonacademic educational travel will no longer be authorized as announced by the President.
  

• ➥   Consistent with the Administration’s interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain people-to-people travelthat previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President’s June 16, 2017 announcement.

Educational Travel

• ➥   In accordance with the NSPM, Americans engaging in certain authorized educational travel will now be required to do so
  
  
• ➥   Consistent with the Administration’s interest in avoiding negative impacts on Americans for arranging lawful travel to Cuba, certain educational travel that previously was authorized will continue to be authorized where the traveler has completed at least one travel-related transaction prior to the publication of the regulations on November 9.

 Support for the Cuban People Travel

• 
  

➥  In accordance with the NSPM, OFAC is requiring that each traveler under this travel category engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba. Such activities must also enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people's independence from Cuban authorities. Renting a room in a private Cuban residence (casa particular), eating at privately owned Cuban restaurants (paladares), and shopping at privately owned stores run by self- employed Cubans (cuentapropistas) are examples of authorized activities; however, in order to meet the requirement of a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.
Prohibited Officials

➥  In accordance with the NSPM, OFAC is amending the definition of the term prohibited officials of the Government of Cuba to include certain additional individuals. BIS is making conforming changes to three license exceptions that include the same definition. This definitional change will affect certain otherwise-authorized transactions with the expanded group of such officials.

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DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR Parts 740 and 746

[Docket No. 171013999-7999-01] RIN 0694-AH47

Amendments to Implement United States Policy toward Cuba AGENCY: Bureau of Industry and Security, Commerce. ACTION: Final rule.

SUMMARY: This rule amends the licensing policy for Cuba and portions of three license exceptions available for exports and reexports to Cuba: License Exceptions Gift Parcels and Humanitarian Donations (“GFT”), Consumer Communications Devices (“CCD”), and Support for the Cuban People (“SCP”). The Bureau of Industry and Security is publishing this rule to implement portions of the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, dated June 16, 2017.

DATES: This rule is effective [INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER]
FOR FURTHER INFORMATION CONTACT: Foreign Policy Division, Bureau of Industry and Security, Phone: (202) 482-4252.

SUPPLEMENTARY INFORMATION:

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BILLING CODE 3510-33-P

Background
On June 16, 2017, President Trump announced changes to U.S. policy toward Cuba that are intended to enhance compliance with United States law; hold the Cuban regime accountable for oppression and human rights abuses; further the national security and foreign policy interests of the United States and the interests of the Cuban people; and lay the groundwork for empowering the Cuban people to develop greater economic and political liberty. The President’s policy is stated in the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba (“Cuba NSPM”), dated June 16, 2017. The Cuba NSPM also directs the Secretary of Commerce, as well as the Secretaries of State and the Treasury, to take certain actions to implement the President’s Cuba policy.
The Department of Commerce’s Bureau of Industry and Security (“BIS”) is issuing this final rule to implement portions of the Cuba NSPM. The Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the Department of State are simultaneously publishing related actions in the Federal Register.

Specific Changes Made by This Rule
Cuba Licensing Policy
In accordance with the statutory embargo of Cuba, license applications for the export or reexport to Cuba of items subject to the Export Administration Regulations (“EAR”) currently are subject to a general policy of denial unless the transactions are eligible for another review policy stated in § 746.2(b). License applications for certain export or reexport transactions are reviewed on a case-by-case basis or under a general policy of approval, depending upon the types of items, end uses, and end users involved, as described in the EAR.

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On January 27, 2016, BIS created a case-by-case licensing policy in paragraph (b)(3)(i) of § 746.2 of the EAR for applications to export or reexport items to meet the needs of the Cuban people, including exports and reexports of such items to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people (81 FR 4580). Note 2 to paragraph (b)(3)(i) explains that BIS generally will deny applications to export or reexport items for use by state-owned enterprises, agencies, and other organizations that primarily generate revenue for the state, including those engaged in tourism and those engaged in the extraction or production of minerals or other raw materials. Note 2 to paragraph (b)(3)(i) also explains that BIS generally will deny applications for the export or reexport of items destined to the Cuban military, police, intelligence, or security services.
Pursuant to section 3(a) of the Cuba NSPM, this rule amends note 2 to paragraph (b)(3)(i) of § 746.2 of the EAR to clarify that BIS also generally will deny applications for the export or reexport of items for use by certain entities or subentities the State Department identifies on its List of Restricted Entities and Subentities associated with Cuba (“Cuba Restricted List”), unless such transactions are determined to be consistent with the Cuba NSPM. Section 3(a)(i) of the Cuba NSPM directs the Secretary of State to publish a list of entities and subentities that it has determined 1) are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel and 2) with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba (Cuba Restricted List). Today the Department of State is publishing that list in the Federal Register and posting it on its website at https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/index.htm.

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Section 3(a)(ii) of the Cuba NSPM states that regulatory changes made pursuant to section 3(a) shall prohibit direct financial transactions with entities or subentities identified by the Department of State’s Cuba Restricted List unless the transactions are determined by the Secretary of Commerce or the Secretary of the Treasury, in coordination with the Secretary of State, to be consistent with the policy in section 2 and the criteria specified in section 3(a)(iii)(A)-(I) of the Cuba NSPM. Consequently, license applications submitted to BIS that involve one or more parties on the Department of State’s Cuba Restricted List generally will be denied unless the transactions are determined by BIS, in coordination with the Department of State, to be consistent with the aforementioned sections of the Cuba NSPM.
Prohibited Cuban Government Officials
License exceptions authorize certain exports and reexports pursuant to specified terms and conditions. Only the license exceptions specified in § 746.2(a)(1) of the EAR are available for exports and reexports to Cuba. License Exceptions Gift Parcels and Humanitarian Donations (“GFT”), Consumer Communications Devices (“CCD”), and Support for the Cuban People (“SCP”) (§§ 740.12, 740.19, and 740.21 of the EAR, respectively) specify certain eligible and ineligible Cuban transaction parties. On October 17, 2016, BIS revised its list of ineligible Cuban government officials in §§ 740.12(a)(2)(v)(A), 740.19(c)(2)(i), and 740.21(d)(4)(ii) of the EAR to correspond to amendments OFAC made to its definition of prohibited officials of the Government of Cuba in § 515.337 of the Cuban Assets Control Regulations (“CACR”) (31 CFR part 515) (81 FR 71365).
In accordance with section 3(d) of the Cuba NSPM, today OFAC is amending its definition of prohibited officials of the Government of Cuba to include certain additional

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individuals. This rule amends the list of ineligible Cuban government officials in §§ 740.12(a)(2)(v)(A), 740.19(c)(2)(i), and 740.21(d)(4)(ii) of the EAR to conform with OFAC’s amendment.

Cuban Private Sector
On January 16, 2015, BIS created License Exception Support for the Cuban People (SCP) in § 740.21 of the EAR to authorize the export and reexport of certain items to Cuba that are intended to improve the living conditions of the Cuban people; support independent economic activity and strengthen civil society in Cuba; and improve the free flow of information to, from, and among the Cuban people (80 FR 2286). On September 21, 2015, March 16, 2016, and October 17, 2016, BIS amended License Exception SCP to authorize additional categories of exports and reexports intended to further benefit the Cuban people (80 FR 56898, 81 FR 13972, and 81 FR 71365, respectively).
Consistent with section 2(d) of the Cuba NSPM, this rule revises § 740.21(b) to further support free enterprise in Cuba. Prior to this rule, the text in § 740.21(b)(1)-(3) identified certain types of items, such as tools and equipment, that were eligible for export or reexport to Cuba for 1) use by the private sector to construct or renovate privately-owned buildings, 2) private sector agricultural activities, or 3) use by private sector entrepreneurs. This rule simplifies and expands § 740.21(b) by creating a single provision authorizing the export and reexport to Cuba of items, without specifying types, for use by the Cuban private sector for private sector economic activities. To be eligible for this provision, the items may not be used to primarily generate revenue for the state or used to contribute to the operation of the state, including through the construction or renovation of state-owned buildings. Additionally, eligible items are limited to

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those that are designated as EAR99 or controlled only for anti-terrorism reasons on the Commerce Control List (“CCL”). Of note, medicines, medical devices, and agricultural commodities are not eligible for any provision of License Exception SCP due to limitations in the Cuban Democracy Act of 1992, as amended (22 U.S.C. 6001-6010) and the Trade Sanctions Reform and Export Enhancement Act of 2000, as amended (22 U.S.C. 7201-7211).

Export Administration Act
Although the Export Administration Act of 1979 expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 15, 2017, 82 FR 39005 (August 16, 2017), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act of 1979, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222, as amended by Executive Order 13637.

Rulemaking Requirements
1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a ‘‘significant regulatory action,’’

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although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB). This rule is not subject to the requirements of E.O. 13771 (82 FR 9339, February 3, 2017) because it is issued with respect to a foreign affairs function of the United States.
2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid OMB control number. This rule involves a collection of information approved under OMB control number 0694- 0088—Simplified Network Application Processing+ System (SNAP+) and the Multipurpose Export License Application, which carries an annual estimated burden of 31,833 hours. BIS believes that this rule will have no significant impact on that burden. To the extent that it has any impact, BIS believes that this rule will reduce the paperwork burden to the public because it will make some transactions that currently require a license from BIS eligible for a license exception. In those instances, exporters and reexporters will be relieved of the burden of applying for a license. Although this rule makes certain additional Cuban government officials ineligible for specified license exceptions, BIS believes that this change will result in the submission of very few, if any, additional license applications.
Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget, by email at jseehra@omb.eop.gov or by fax to (202) 395-7285.

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3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.
4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking and the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). This rule implements portions of the President Trump’s policy toward Cuba, as directed by the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, dated June 16, 2017. Delay in implementing this rule to obtain public comment would undermine the foreign policy objectives that the rule is intended to implement. Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 5 U.S.C. 553, or by any other law, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

List of Subjects 15 CFR Part 740

Administrative practice and procedure, Exports, Reporting and recordkeeping requirements
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.

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For the reasons set forth in the preamble, 15 CFR Chapter VII, Subchapter C is amended as follows:
PART 740–[AMENDED]

1. The authority citation for part 740 continues to read as follows:
   Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 15, 2017, 82 FR 39005 (August 16, 2017).
   
2. Section 740.12 is amended by revising paragraph (a)(2)(v)(A) to read as follows:
   

§740.12 Gift parcels and humanitarian donations (GFT).
(a) * * *
(2)* * *
(v) * * * (A) No gift parcel may be sent to any of the following officials of the Cuban government: Ministers and Vice-Ministers; members of the Council of State; members of the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors and deputy editors of Cuban state-

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run media organizations and programs, including newspapers, television, and radio; or members and employees of the Supreme Court (Tribuno Supremo Nacional).
*****
3. Section 740.19 is amended by revising paragraph (c)(2)(i) to read as follows:
§ 740.19 Consumer Communications Devices (CCD).
*****
(c) * * *
(2)* * *
(i) Ineligible Cuban Government Officials. Ministers and Vice-Ministers; members of the Council of State; members of the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; or members and employees of the Supreme Court (Tribuno Supremo Nacional).
*****
4. Section 740.21 is amended by: a. Revising paragraph (b)(1);

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2. Removing paragraphs (b)(2) and (3);
   
3. Redesignating paragraph (b)(4) as new paragraph (b)(2); and
   
4. Revising paragraph (d)(4)(ii) to read as follows:
   

§ 740.21 Support for the Cuban People (SCP).
*****
(b)* * *
(1) Items for use by the Cuban private sector for private sector economic activities, except for items that would be used to:
(i) Primarily generate revenue for the state; or
(ii) Contribute to the operation of the state, including through the construction or renovation of state-owned buildings.
(2) Items sold directly to individuals in Cuba for their personal use or their immediate family’s personal use, other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section.
*****
(d)* * *
(4)* * *
(ii) Ministers and Vice-Ministers; members of the Council of State; members of the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors and deputy editors of Cuban state-run

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media organizations and programs, including newspapers, television, and radio; or members and employees of the Supreme Court (Tribuno Supremo Nacional); and
*****
PART 746-[AMENDED]
5. The authority citation for part 746 continues to read as follows:
Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117 Stat. 559; 22 U.S.C. 6004; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p. 614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR 26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7, 72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 9, 2017, 82 FR 21909 (May 10, 2017); Notice of August 15, 2017, 82 FR 39005 (August 16, 2017).
6. Section 746.2 is amended by revising Note 2 to Paragraph (b)(3)(i) to read as follows:
§746.2 Cuba.
*****

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(b) * * *
(3)* * *
(i)* * *
NOTE 2 TO PARAGRAPH (b)(3)(i): The policy of case-by-case review in this paragraph is intended to facilitate exports and reexports to meet the needs of the Cuban people. Accordingly, BIS generally will deny applications to export or reexport items for use by state-owned enterprises, agencies, and other organizations that primarily generate revenue for the state, including those engaged in tourism and those engaged in the extraction or production of minerals or other raw materials. Applications for export or reexport of items destined to the Cuban military, police, intelligence or security services also generally will be denied. Additionally, pursuant to section 3(a) of the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba (NSPM), dated June 16, 2017, BIS generally will deny applications to export or reexport items for use by entities or subentities identified by the Department of State in the Federal Register or at https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/index.htm, unless such transactions are determined to be consistent with sections 2 and 3(a)(iii) of the NSPM.
*****
Dated: November 6, 2017.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2017-24448 Filed: 11/8/2017 8:45 am; Publication Date: 11/9/2017]

__________ 

DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 515
Cuban Assets Control Regulations
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule.
-------------------
SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations to implement the National Security Presidential Memorandum (NSPM), “Strengthening the Policy of the United States Toward Cuba,” signed by the President on June 16, 2017. These amendments implement changes to the authorizations for travel to Cuba and related transactions and restrict certain financial transactions. These amendments also implement certain technical and conforming changes.
DATES: Effective: [INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER].
FOR FURTHER INFORMATION CONTACT: The Department of the Treasury’s Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director

for Regulatory Affairs, tel.: 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury’s Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.
SUPPLEMENTARY INFORMATION:
Electronic Availability
This document and additional information concerning OFAC are available from OFAC’s website (www.treasury.gov/ofac).
Background
The Department of the Treasury issued the Cuban Assets Control Regulations, 31 CFR part 515 (the “Regulations”), on July 8, 1963, under the Trading With the Enemy Act (50 U.S.C. 4301-41). OFAC has amended the Regulations on numerous occasions. Today, OFAC, the Department of Commerce’s Bureau of Industry and Security, and the Department of State are taking coordinated actions to implement the NSPM, “Strengthening the Policy of the United States Toward Cuba,” signed by the President on June 16, 2017.
OFAC is making amendments to the Regulations with respect to financial transactions, travel and related transactions, educational activities, support for the Cuban people, and certain other activities, as set forth below.

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Financial Transactions
Restrictions on direct financial transactions with certain entities and subentities. In accordance with section 3(a)(i) of the NSPM, the State Department is publishing a list of entities and subentities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security service or personnel, and with which direct financial transactions would disproportionately benefit the Cuban military, intelligence, or security services or personnel at the expense of the Cuban people or private enterprise in Cuba – the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List”). In accordance with section 3(a)(ii) of the NSPM, OFAC is adding new § 515.209 to restrict direct financial transactions with entities and subentities listed on the Cuba Restricted List. OFAC is making conforming edits to § 515.421 to clarify that transactions ordinarily incident to licensed transactions do not include direct financial transactions with such entities and subentities if the terms of the applicable general or specific license expressly exclude such direct financial transactions.
In order to implement this prohibition, OFAC is adding corresponding language in the following general licenses: §§ 515.530, 515.534, 515.545, 515.560, 515.561, 515.564, 515.565, 515.566, 515.567, 515.572, 515.573, 515.574, 515.576, 515.577, 515.578, 515.581, 515.584, and 515.590. OFAC has not incorporated this prohibition into certain general licenses in accordance with the exceptions detailed in section 3(a)(iii) of the NSPM.

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Travel and Related Transactions
Educational travel. In accordance with section 3(b) of the NSPM, OFAC is revising the categories of educational travel currently set forth in § 515.565(a)(1)-(6) to authorize travel that was permitted by regulation in effect on January 27, 2011.
In addition, OFAC is adding the requirement set forth in the NSPM that certain categories of educational travel authorized by § 515.565(a), which were not permitted by regulation in effect on January 27, 2011, take place under the auspices of an organization that is a person subject to U.S. jurisdiction. This requirement is incorporated in § 515.565(a)(2). The same provision also now will require that all travelers must be accompanied by a person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization, except in cases where the traveler is an employee, paid consultant, agent, or other representative traveling individually (not as part of a group), if the individual obtains a letter from the sponsoring organization. Such a letter must state that: (1) the individual is traveling to Cuba as an employee, paid consultant, agent, or other representative (including specifying the responsibilities of the individual that make him or her a representative) of the sponsoring organization; (2) the individual is acting for or on behalf of, or otherwise representing, the sponsoring organization; and (3) the individual’s travel to Cuba is related to his or her role at the sponsoring organization.
In addition, OFAC is adding a “grandfathering” provision in § 515.565(d) to authorize certain travel that previously was authorized where the traveler has already completed at least

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one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to [INSERT DATE OF PUBLICATION IN FEDERAL REGISTER].
People-to-people educational travel. In accordance with section 3(b)(ii) of the NSPM, OFAC is amending § 515.565(b) to require that people-to-people educational travel be conducted under the auspices of an organization that is subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, and that such travelers be accompanied by a person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization. Travel-related transactions authorized pursuant to this section must be for the purpose of engaging, while in Cuba, in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities; and result in meaningful interactions with individuals in Cuba. In addition, OFAC is adding a “grandfathering” provision in § 515.565(e) to authorize certain people-to-people travel that previously was authorized where the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 16, 2017.
Support for the Cuban people. In accordance with section 3(b)(ii) of the NSPM, OFAC is amending § 515.574 to require that each traveler engage in a full-time schedule of activities that result in meaningful interaction with individuals in Cuba and that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities.

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Other Amendments
Definition of prohibited officials of the Government of Cuba. In accordance with section 3(d) of the NSPM, OFAC is amending the definition of the term prohibited officials of the Government of Cuba in § 515.337 to include certain additional individuals. The revised definition corresponds to that which was in place prior to October 17, 2016.
Public Participation
Because the amendments of the Regulations involve a foreign affairs function, Executive Order 12866 and the provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, as well as the provisions of Executive Order 13771, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.
Paperwork Reduction Act
The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”) and § 515.572 of this part. Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information are covered by the Office of Management and Budget under control numbers 1505- 0164, 1505-0167, and 1505-0168. An agency may not conduct or sponsor, and a person is not

6

required to respond to, a collection of information unless the collection of information displays a valid control number.
List of Subjects in 31 CFR Part 515
Administrative practice and procedure, Banking, Blocking of assets, Cuba, Financial transactions, Reporting and recordkeeping requirements, Travel restrictions.
For the reasons set forth in the preamble, the Department of the Treasury’s Office of Foreign Assets Control amends 31 CFR part 515 as set forth below:
PART 515—CUBAN ASSETS CONTROL REGULATIONS
1. The authority citation for part 515 continues to read as follows:
Authority: 22 U.S.C. 2370(a), 6001-6010, 7201-7211; 31 U.S.C. 321(b); 50 U.S.C. 4301- 4341; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104-114, 110 Stat. 785 (22 U.S.C. 6021-6091); Pub. L. 105-277, 112 Stat. 2681; Pub. L. 111-8, 123 Stat. 524; Pub. L. 111-117, 123 Stat. 3034; E.O. 9193, 7 FR 5205, 3 CFR, 1938-1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p. 748; Proc. 3447, 27 FR 1085, 3 CFR, 1959- 1963 Comp., p. 157; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p. 614.
Subpart B — Prohibitions

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2. Add § 515.209 to subpart B to read as follows:
§ 515.209 Restrictions on direct financial transactions with certain entities and subentities.
(a) Except as otherwise authorized pursuant to this part, no person subject to U.S. jurisdiction may engage in a direct financial transaction with any person that the Secretary of State has identified as an entity or subentity that is under the control of, or acts for or on behalf of, the Cuban military, intelligence, or security services or personnel and with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba. 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”) or as the ultimate beneficiary on a transfer of funds whose originator is an entity or subentity on the Cuba Restricted List, including a transaction by wire transfer, credit card, check, or payment of cash. This prohibition does not apply to certain transactions set forth in paragraphs (b) and (c) of this section.
Note to paragraph (a): The names of entities and subentities that the Secretary of State has identified as meeting the criteria set forth in this section are published in the Federal Register and incorporated into the Cuba Restricted List. Entities or subentities that are owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the Cuba Restricted List. The Cuba Restricted List is maintained by the

8

State Department and will be published in the Federal Register. It is also accessible through the following page on the State Department’s website: http://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/index.htm.
(b) The prohibition in paragraph (a) of this section does not apply to any travel-related transactions, including those that involve direct financial transactions with an entity or subentity on the Cuba Restricted List, provided those travel-related transactions were initiated prior to the date that entity or subentity was added to the Cuba Restricted List as published in the Federal Register.
(c) The prohibition in paragraph (a) of this section does not apply to any transactions related to commercial engagements that involve direct financial transactions with an entity or subentity on the Cuba Restricted List, provided those commercial engagements were in place prior to the date that entity or subentity was added to the Cuba Restricted List as published in the Federal Register.
Note to § 515.209: This section does not prohibit a person subject to U.S. jurisdiction from participating in an indirect financial transaction, such as those authorized pursuant to
§ 515.584(d) relating to funds transfers or § 515.584(g) relating to U.S. dollar monetary instruments, where the person does not act as the originator or beneficiary on a transfer of funds.
Subpart C — Definitions

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3. Revise § 515.337 to read as follows:
§ 515.337 Prohibited officials of the Government of Cuba.
For purposes of this part, the term prohibited officials of the Government of Cuba means Ministers and Vice-Ministers; members of the Council of State and the Council of Ministers; members and employees of the National Assembly of People’s Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors, and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; and members and employees of the Supreme Court (Tribuno Supremo Nacional).
Subpart D — Interpretations
4. Amend § 515.421 by removing the text “or” at the end of paragraph (a)(3), removing the period at the end of the introductory text to paragraph (a)(4) and adding the text “; or” in its place, and adding paragraph (a)(5) to read as follows:
§ 515.421 Transactions ordinarily incident to a licensed transaction.

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(a) * * *
(5) A direct financial transaction prohibited by § 515.209, where the terms of the applicable general or specific license expressly exclude such a transaction.
**** *
Subpart E — Licenses, Authorizations, and Statements of Licensing Policy
5. Amend § 515.530 by adding paragraph (d) to read as follows:
§ 515.530 Exportation of powers of attorney or instructions relating to certain types of transactions.
*****
(d) Certain direct financial transactions restricted. Nothing in this section authorizes a direct financial transaction prohibited by § 515.209.
6. Amend § 515.533 by revising paragraph (b) to read as follows:

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§ 515.533 Exportations from the United States to Cuba; reexportation to Cuba; importation and servicing or repair of certain items previously exported or reexported to Cuba.
**** *
(b) Importation of certain items previously exported to Cuba; servicing and repair of such items. All transactions ordinarily incident to the importation into the United States or a third country of items previously exported from the United States to Cuba or exported or reexported from a third country to Cuba, and the servicing and repair of such items, are authorized, provided that:
(1) The items previously were exported or reexported to Cuba pursuant to paragraph (a) of this section or § 515.559; and
(2) The items are being imported into the United States or a third country either:
(i) In order to service or repair them before they are exported or reexported back to Cuba, or
(ii) To return them to the United States or a third country.

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Note to paragraph (b): This paragraph does not authorize the exportation or reexportation of any item to Cuba. The exportation or reexportation of serviced, repaired, or replacement items to Cuba must be separately authorized pursuant to paragraph (a) of this section or § 515.559, in addition to any Department of Commerce authorization that may be required.
**** *
7. Amend § 515.534 by adding paragraph (c) to read as follows:
§ 515.534 Negotiation of, and entry into, contingent contracts relating to transactions prohibited by this part.
**** *
(c) Certain direct financial transactions restricted. Nothing in this section authorizes a direct financial transaction prohibited by § 515.209.
**** *
8. Amend § 515.545 by redesignating paragraph (c) as paragraph (d) and adding new paragraph (c) to read as follows:

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§ 515.545 Transactions related to information and informational materials.
**** *
(c) Certain direct financial transactions restricted. Nothing in paragraphs (a) or (b) of this section authorizes a direct financial transaction prohibited by § 515.209.
**** *
9. Amend § 515.560 by revising the introductory text to paragraph (c), revising paragraph (c)(1), redesignating paragraph (d) as paragraph (e), and adding new paragraph (d) to read as follows:
§ 515.560 Travel-related transactions to, from, and within Cuba by persons subject to U.S. jurisdiction.
**** *
(c) Except as provided in paragraph (d) of this section, persons generally or specifically licensed under this part to engage in transactions in connection with travel to, from, and within Cuba may engage in the following transactions:

14

(1) Transportation to, from, and within Cuba; Cuban visas. All transportation-related transactions ordinarily incident to travel to, from, and within Cuba, including the acquisition of Cuban visas, are authorized.
**** *
(d) Nothing in paragraphs (c)(2), (c)(3), and (c)(6)(i) of this section authorizes a direct financial transaction prohibited by § 515.209 if the terms of the applicable general or specific license expressly exclude such a transaction.
**** *
10. Amend § 515.561 by removing the text “§ 515.565(a)(1) through (4) and (6)” and adding in its place the text “§ 515.565(a)(1)(i) through (iv) and (vi)” and adding a sentence at the end of paragraph (a) to read as follows:
§ 515.561 Family visits.
(a) * * * Nothing in this paragraph authorizes a direct financial transaction prohibited by § 515.209.
**** *
11. Amend § 515.564 by redesignating paragraph (c) as paragraph (d) and adding new paragraph (c) to read as follows:

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§ 515.564 Professional research and professional meetings in Cuba.
* * * **
(c) Certain direct financial transactions restricted. Nothing in paragraph (a) of this section authorizes a direct financial transaction prohibited by § 515.209.
*****
12. Revise § 515.565 to read as follows:
§ 515.565 Educational activities.
(a) General license for educational activities. (1) Accredited U.S. undergraduate or graduate degree-granting academic institutions, their students enrolled in an undergraduate or graduate degree program at the institution, and their full-time permanent employees, are authorized to engage, under the auspices of the institutions, in transactions, including the travel- related transactions set forth in § 515.560(c), that are directly incident to the following activities:
(i) Participation in a structured educational program in Cuba as part of a course offered at the U.S. institution, provided the program includes a full term, and in no instance includes fewer than 10 weeks, of study in Cuba. An individual planning to engage in such transactions must obtain a letter from the U.S. institution stating that the individual is a student currently enrolled in an undergraduate or graduate degree program at the institution, or is a full-time permanent

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employee of the institution, and that the Cuba-related travel is part of a structured educational program of the U.S. institution that will be no shorter than 10 weeks in duration;
(ii) Noncommercial academic research in Cuba specifically related to Cuba and for the purpose of obtaining a graduate degree. A student planning to engage in such transactions must obtain a letter from the U.S. institution stating that the individual is a student currently enrolled in a graduate degree program at the U.S. institution and that the research in Cuba will be accepted for credit toward that degree;
(iii) Participation in a formal course of study at a Cuban academic institution, provided the formal course of study in Cuba will be accepted for credit toward the student’s undergraduate or graduate degree at the U.S. institution and provided that the course of study is no shorter than 10 weeks in duration. An individual planning to engage in such transactions must obtain a letter from the U.S. institution stating that the individual is a student currently enrolled in an undergraduate or graduate degree program at the U.S. institution and that the study in Cuba will be accepted for credit toward that degree and will be no shorter than 10 weeks in duration;
(iv) Teaching at a Cuban academic institution by an individual regularly employed in a teaching capacity at the U.S. institution, provided the teaching activities are related to an academic program at the Cuban institution and provided that the duration of the teaching will be no shorter than 10 weeks. An individual planning to engage in such transactions must obtain a letter from the U.S. institution stating that the individual is a full-time permanent employee regularly employed in a teaching capacity at the U.S. institution;

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(v) Sponsorship of a Cuban scholar to teach or engage in other scholarly activity at the U.S. institution (in addition to those transactions authorized by the general license contained in § 515.571); and
Note to paragraph (a)(1)(V): See § 515.571(a) for authorizations related to certain banking transactions and receipt of salary or other compensation by Cuban nationals present in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government.
(vi) The organization of, and preparation for, the activities described in paragraphs (a)(1)(i) through (a)(1)(v) of this section by a full-time permanent employee of the U.S. institution. An individual engaging in such transactions must obtain a letter from the U.S. institution stating that the individual is a full-time permanent employee of the U.S. institution.
(2) To the extent not authorized in paragraph (a)(1) of this section, persons subject to U.S. jurisdiction, including U.S. academic institutions and their faculty, staff, and students, are authorized to engage in transactions, including the travel-related transactions set forth in
§ 515.560(c), that are directly incident to the following activities, provided that any travel-related transactions pursuant to these authorizations take place under the auspices of an organization that is a person subject to U.S. jurisdiction, and further provided that all such travelers be accompanied by a person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization, except in cases where the traveler is an

18

employee, paid consultant, agent, or other representative traveling individually (not as part of a group) and the individual traveler obtains a letter from the sponsoring organization stating that: the individual is traveling to Cuba as an employee, paid consultant, agent, or other representative (including specifying the responsibilities of the individual that make him or her a representative) of the sponsoring organization; the individual is acting for or on behalf of, or otherwise representing, the sponsoring organization; and the individual’s travel to Cuba is related to his or her role at the sponsoring organization:
(i) Participation in a structured educational program in Cuba as part of a course offered for credit by a U.S. graduate or undergraduate degree-granting academic institution that is sponsoring the program;
(ii) Noncommercial academic research in Cuba specifically related to Cuba and for the purpose of obtaining an undergraduate or graduate degree;
(iii) Participation in a formal course of study at a Cuban academic institution, provided the formal course of study in Cuba will be accepted for credit toward the student’s graduate or undergraduate degree;
(iv) Teaching at a Cuban academic institution related to an academic program at the Cuban institution, provided that the individual is regularly employed by a U.S. or other non- Cuban academic institution;

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(v) Sponsorship of a Cuban scholar to teach or engage in other scholarly activity at the sponsoring U.S. academic institution (in addition to those transactions authorized by the general license contained in § 515.571).
Note to paragraph (a)(2)(v): See § 515.571(a) for authorizations related to certain banking transactions and receipt of salary or other compensation by Cuban nationals present in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization issued by the U.S. government.
(vi) Educational exchanges sponsored by Cuban or U.S. secondary schools involving secondary school students’ participation in a formal course of study or in a structured educational program offered by a secondary school or other academic institution and led by a teacher or other secondary school official. This includes participation by a reasonable number of adult chaperones to accompany the secondary school students to Cuba;
(vii) Sponsorship or co-sponsorship of non-commercial academic seminars, conferences, symposia, and workshops related to Cuba or global issues involving Cuba and attendance at such events by faculty, staff, and students of a participating U.S. academic institution;
(viii) Establishment of academic exchanges and joint non-commercial academic research projects with universities or academic institutions in Cuba;

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(ix) Provision of standardized testing services, including professional certificate examinations, university entrance examinations, and language examinations, and related preparatory services for such exams, to Cuban nationals, wherever located;
(x) Provision of internet-based courses, including distance learning and Massive Open Online Courses, to Cuban nationals, wherever located, provided that the course content is at the undergraduate level or below;
(xi) The organization of, and preparation for, activities described in paragraphs (a)(2)(i) through (a)(2)(x) of this section by an employee, paid consultant, agent, or other representative of the sponsoring organization that is a person subject to U.S. jurisdiction; and
(xii) Facilitation by an organization that is a person subject to U.S. jurisdiction, or a member of the staff of such an organization, of licensed educational activities in Cuba on behalf of U.S. academic institutions or secondary schools, provided that:
(A) The organization is directly affiliated with one or more U.S. academic institutions or secondary schools; and
(B) The organization facilitates educational activities that meet the requirements of one or more of the general licenses set forth in paragraphs (a)(1)(i) through (iii), (a)(2)(i) through (iii), and (a)(2)(vi) of this section.

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Note to paragraph (a)(2): The authorizations in this paragraph extend to adjunct faculty and part-time staff of U.S. academic institutions. A student enrolled in a U.S. academic institution is authorized pursuant to paragraph (a)(2) of this section to participate in the academic activities in Cuba described through any sponsoring U.S. academic institution.
Example to paragraph (a)(2): An individual undergraduate student serves as a research assistant at his or her U.S. undergraduate degree-granting academic institution. This individual may travel to Cuba to engage in noncommercial academic research specifically related to Cuba for the purpose of obtaining an undergraduate degree pursuant to paragraph (a)(2)(ii) of this section if the student is either accompanied by an employee, paid consultant, agent, or other representative of the academic institution (either individually or as part of a group), or has obtained a letter from the institution stating that the student is an employee, paid consultant, agent, or other representative (including specifying the responsibilities that make him or her a representative) of the academic institution, that the student is acting for or on behalf of or otherwise representing the academic institution, and that the student’s travel to Cuba is related to his or her role at the academic institution.
Note 1 to paragraph (a): See § 515.560(c)(6) for an authorization for individuals to open and maintain accounts at Cuban financial institutions; see § 515.573 for an authorization for entities conducting educational activities authorized by § 515.565(a) to establish a physical presence in Cuba, including an authorization to open and maintain accounts at Cuban financial institutions.

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Note 2 to paragraph (a): The export or reexport to Cuba of goods (including software) or technology subject to the Export Administration Regulations (15 CFR parts 730 through 774) may require separate authorization from the Department of Commerce.
Note 3 to paragraph (a): See § 515.590(a) for an authorization for the provision of educational grants, scholarships, or awards to a Cuban national or in which Cuba or a Cuban national otherwise has an interest.
(b) General license for people-to-people travel. The travel-related transactions set forth in § 515.560(c) and such additional transactions as are directly incident to educational exchanges not involving academic study pursuant to a degree program are authorized, provided that:
(1) The exchanges take place under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact;
(2) Travel-related transactions pursuant to this authorization are for the purpose of engaging, while in Cuba, in a full-time schedule of activities that enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities;
(3) Each traveler has a full-time schedule of educational exchange activities that result in meaningful interaction between the traveler and individuals in Cuba;

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(4) A person subject to U.S. jurisdiction who is an employee, paid consultant, agent, or other representative of the sponsoring organization accompanies each group traveling to Cuba to ensure that each traveler has a full-time schedule of educational exchange activities;
(5) The predominant portion of the activities engaged in by each travelers is not with a prohibited official of the Government of Cuba, as defined in § 515.337, or a prohibited member of the Cuban Communist Party, as defined in § 515.338; and
(6) In addition to all other information required by § 501.601 of this chapter, persons relying on the authorization in paragraph (b) of this section, including entities sponsoring travel pursuant to the authorization in paragraph (b) of this section, must retain records sufficient to demonstrate that each individual traveler has engaged in a full-time schedule of activities that satisfy the requirements of paragraphs (b)(1) through (b)(5) of this section. Individuals may rely on the entity sponsoring the travel to satisfy his or her recordkeeping requirements with respect to the requirements of paragraphs (b)(1) through (5) of this section. These records must be furnished to the Office of Foreign Assets Control on demand pursuant to § 501.602 of this chapter.
Example 1 to paragraph (b): An organization sponsors and organizes educational exchanges not involving academic study pursuant to a degree program for travelers to learn side- by-side with Cuban individuals in areas such as environmental protection or the arts. Each traveler in the group will have a full-time schedule of educational exchange activities that result

24

in meaningful interaction between the travelers and individuals in Cuba. The group will be accompanied by a person who is subject to U.S. jurisdiction who is a representative of the sponsoring organization for the duration of the trip. The organization’s activities qualify for the general license for people-to-people travel. In addition, the individual travelers may rely on the entity sponsoring the travel to satisfy their recordkeeping requirements.
Example 2 to paragraph (b): An individual plans to travel to Cuba to participate in discussions with Cuban artists on community projects, exchanges with the founders of a youth arts program, and extended dialogue with local city planners and architects to learn about historical restoration projects in Old Havana. The individual traveler will have a full-time schedule of such educational exchange activities that result in meaningful interaction between the traveler and individuals in Cuba. The individual’s activities do not qualify for the general license for people-to-people travel because the individual is not traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact. The individual’s travel may qualify for the general license in § 515.574 (Support for the Cuban People) provided the individual meets all of its requirements.
Note to paragraphs (a) and (b): Except as provided in paragraph (b)(6) of this section, each person relying on the general authorizations in these paragraphs, including entities sponsoring travel pursuant to the authorization in paragraph (b) of this section, must retain specific records related to the authorized travel transactions. See §§ 501.601 and 501.602 of this chapter for applicable recordkeeping and reporting requirements.

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(c) Certain direct financial transactions restricted. Nothing in paragraph (a) or (b) of this section authorizes a direct financial transaction prohibited by § 515.209.
(d) General license for certain educational travel and related transactions where certain transactions were completed prior to [INSERT DATE OF PUBLICATION IN FEDERAL REGISTER]. Persons subject to U.S. jurisdiction are authorized to engage in educational travel and related transactions for a trip consistent with paragraph (a) of this section as those provisions existed on June 16, 2017, provided the traveler completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) for that particular trip prior to [INSERT DATE OF PUBLICATION IN FEDERAL REGISTER] and further provided any new travel-related transactions initiated on or after [INSERT DATE OF PUBLICATION IN FEDERAL REGISTER] do not involve a direct financial transaction prohibited by § 515.209.
(e) General license for certain people-to-people travel and related transactions where certain transactions were completed prior to June 16, 2017. Persons subject to U.S. jurisdiction are authorized to engage in people-to-people travel and related transactions for a trip consistent with paragraphs (b)(1)-(3) of this section as those provisions existed on June 16, 2017, provided the traveler completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) for that particular trip prior to June 16, 2017, and further provided any new travel-related transactions initiated on or after [INSERT DATE OF PUBLICATION IN FEDERAL REGISTER] do not involve a direct financial transaction prohibited by § 515.209.

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(f) Transactions related to activities that are primarily tourist-oriented are not authorized pursuant to this section.
(g) Specific licenses. Specific licenses may be issued on a case-by-case basis authorizing the travel-related transactions set forth in § 515.560(c) and such other transactions as are related to educational activities that do not qualify for the general licenses under paragraph (a) or (b) of this section.
13. Amend § 515.566 by adding a sentence at the end of paragraph (a) to read as follows:
§ 515.566 Religious activities in Cuba.
(a) * * * Nothing in this paragraph authorizes a direct financial transaction prohibited by § 515.209.
**** *
14. Amend § 515.567 by redesignating paragraph (d) as paragraph (e) and adding new paragraph (d) to read as follows:
§ 515.567 Public performances, clinics, workshops, athletic and other competitions, and exhibitions.
**** *

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(d) Nothing in paragraph (a) or (b) of this section authorizes a direct financial transaction prohibited by § 515.209.
**** *
15. Amend § 515.572 by adding a sentence at the end of paragraph (a)(1) to read as follows:
§ 515.572 Provision of travel, carrier, other transportation-related, and remittance forwarding services.
(a) * * * (1) * * * Nothing in this paragraph authorizes a direct financial transaction prohibited by § 515.209 if the terms of the applicable general or specific license authorizing the travel expressly exclude such a transaction.
**** *
16. Amend § 515.573 by adding paragraph (f) to read as follows:
§ 515.573 Physical presence and business presence in Cuba authorized; Cuban news bureaus.
**** *

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(f) Certain direct financial transactions restricted. (1) Nothing in paragraph (c)(3) of this section, with the exception of transactions related to exports or reexports of agricultural commodities, medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo, or trade, authorizes a direct financial transaction prohibited by § 515.209. Nothing in paragraph (c)(5) of this section, with the exception of transactions concerning air and sea operations that support permissible travel, cargo, or trade, authorizes a direct financial transaction prohibited by § 515.209.
(2) Nothing in paragraph (d)(2), (3), or (6) of this section authorizes a direct financial transaction prohibited by § 515.209.
*****
17. Amend § 515.574 by redesignating paragraph (a)(2) as (a)(3), adding new paragraph (a)(2), redesignating the Note to paragraph (a) as Note 1 to paragraph (a), adding Note 2 to paragraph (a), redesignating paragraph (c) as paragraph (d), adding new paragraph (c), and adding Examples (1)-(3) to § 515.574 to read as follows:
§ 515.574 Support for the Cuban people.
(a) * * *

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(2) Each traveler engages in a full-time schedule of activities that:
(i) Enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities; and
(ii) Result in meaningful interaction with individuals in Cuba.
**** *
Note 2 to paragraph (a): Staying in a room at a rented accommodation in a private Cuban residence (casa particular), eating at privately-owned Cuban restaurants (paladares), and shopping at privately-owned stores run by self-employed Cubans (cuentapropista) are examples of activities that qualify for this general license. However, in order to meet the requirement for a full-time schedule, a traveler must engage in additional authorized Support for the Cuban People activities.
**** *
(c) Certain direct financial transactions restricted. Nothing in paragraph (a)(1)(iii) of this section authorizes a direct financial transaction prohibited by § 515.209, with the exception of transactions on behalf of a non-governmental organization.

30

**** *
Example 1 to § 515.574: An individual plans to travel to Cuba, stay in a room at a rented accommodation in a private Cuban residence (casa particular), eat at privately-owned Cuban restaurants (paladares), and shop at privately-owned stores run by self-employed Cubans (cuentapropista) during his or her four-day trip. While at the casa particular, the individual will have breakfast each morning with the Cuban host and engage with the Cuban host to learn about Cuban culture. In addition, the traveler will complete his or her full-time schedule by supporting Cuban entrepreneurs launching their privately-owned businesses. The traveler’s activities promote independent activity intended to strengthen civil society in Cuba. Because the individual’s qualifying activities are not limited to staying in a room at a rented accommodation in a private Cuban residence (casa particular), eating at privately-owned Cuban restaurants (paladares), and shopping at privately owned stores run by self-employed Cubans (cuentapropista) and the traveler maintains a full-time schedule that enhances contact with the Cuban people, supports civil society in Cuba, and promotes the Cuban people’s independence from Cuban authorities, and that results in meaningful interaction between the traveler and Cuban individuals, the individual’s travel qualifies for the general license.
Example 2 to § 515.574: A group of friends plans to travel and maintain a full-time schedule throughout their trip by volunteering with a recognized non-governmental organization to build a school for underserved Cuban children with the local community. In their free time, the travelers plan to rent bicycles to explore the streets of Havana and visit an art museum. The travelers’ trip would qualify for the general license because the volunteer activities promote

31

independent activity intended to strengthen civil society in Cuba and constitute a full-time schedule that enhances contact with the Cuban people and supports civil society in Cuba, and results in meaningful interaction between the travelers and individuals in Cuba.
Example 3 to § 515.574: An individual plans to travel to Cuba, rent a bicycle to explore the neighborhoods and beaches, and engage in brief exchanges with local beach vendors. The individual intends to stay at a hotel that does not appear on the Cuba Restricted List (see
§ 515.209). The traveler’s trip does not qualify for this general license because none of these activities promote independent activity intended to strengthen civil society in Cuba.
18. Amend § 515.576 by redesignating paragraph (c) as paragraph (d) and by adding new paragraph (c) to read as follows:
§ 515.576 Activities of private foundations or research or educational institutes.
**** *
(c) Certain direct financial transactions restricted. Nothing in paragraph (a) authorizes a direct financial transaction prohibited by § 515.209.
**** *
19. Amend § 515.577 by adding paragraph (f) to read as follows:

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§ 515.577 Authorized transactions necessary and ordinarily incident to publishing.
**** *
(f) Certain direct financial transactions restricted. Nothing in this section authorizes a direct financial transaction prohibited by § 515.209.
20. Amend § 515.578 by redesignating paragraph (f) as paragraph (g) and adding new paragraph (f) to read as follows:
§ 515.578 Exportation, reexportation, and importation of certain internet-based services; importation of software.
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(f) Certain direct financial transactions restricted. Nothing in paragraphs (d) or (e) authorizes a direct financial transaction prohibited by § 515.209.
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21. Amend § 515.581 by adding a sentence at the end to read as follows:

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§ 515.581 Transactions related to conferences in third countries.
* * * Nothing in this paragraph authorizes a direct financial transaction prohibited by § 515.209.
**** *
22. Amend § 515.584 by revising paragraph (f) to read as follows:
§ 515.584 Certain financial transactions involving Cuba.
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(f) Any banking institution, as defined in § 515.314, that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to § 515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. With the exception of transactions related to exports or reexports of medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo, or trade, nothing in this paragraph authorizes a direct financial transaction prohibited by § 515.209.

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**** *
23. Amend § 515.590 by revising the introductory text to read as follows:
§515.590 Certain grants, scholarships, and awards.
The provision of grants, scholarships, or awards relating to the following activities to a Cuban national or in which Cuba or a Cuban national otherwise has an interest is authorized, provided that nothing in this section authorizes a direct financial transaction prohibited by
§ 515.209:
**** *
Dated: November 6, 2017
__________________________
John E. Smith,
Director, Office of Foreign Assets Control
BILLING CODE 4810-AL
[FR Doc. 2017-24447 Filed: 11/8/2017 8:45 am; Publication Date: 11/9/2017]

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