Doing Business in Cuba: Navigating the Evolving Sanctions Landscape, - - PowerPoint PPT Presentation

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Doing Business in Cuba: Navigating the Evolving Sanctions Landscape, - - PowerPoint PPT Presentation

Dec 20, 2023 176 likes •616 views

Presenting a live 90-minute webinar with interactive Q&A Doing Business in Cuba: Navigating the Evolving Sanctions Landscape, Leveraging New Opportunities TUESDAY, APRIL 12, 2016 1pm Eastern | 12pm Central | 11am Mountain |

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Presenting a live 90-minute webinar with interactive Q&A

Doing Business in Cuba: Navigating the Evolving Sanctions Landscape, Leveraging New Opportunities

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, APRIL 12, 2016

Jeff Kruszewski, Vice President and Senior Corporate Counsel, U.S. Bank, Washington, D.C. Thaddeus R. McBride, Partner, Bass Berry & Sims, Washington, D.C. Cheryl A. Palmeri, Esq., Bass Berry & Sims, Washington, D.C.

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Doing Business in Cuba:

Navigating the Evolving Sanctions Landscape, Leveraging New Opportunities

Strafford Publications April 12, 2016

5

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 Jeff Kruszewski – Vice President and Senior Corporate Counsel, U.S. Bank  Thad McBride – Partner, Bass Berry & Sims  Cheryl Palmeri – Associate, Bass Berry & Sims

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Who We Are

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 Regulatory Overview  Cuba Sanctions  Recent Changes  Leveraging New Opportunities  Compliance Best Practices

Agenda

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U.S. Sanctions

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 Who?

  • U.S. Treasury Department, Office of

Foreign Assets Control (OFAC)

 What?

  • Restrict transactions with certain

countries and individuals

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Sanctions Overview

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 How?

  • Broad prohibitions – exports / imports of

goods / services

  • Statutes, Regulations, Executive Orders,

Guidance

  • Licenses
  • General – basically an exception
  • Specific – must apply

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Overview (cont’d)

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 U.S. persons

  • U.S. citizens and LPRs, wherever located
  • Persons in United States, regardless of

nationality

  • Entities organized or headquartered in

United States, including branches

 In case of Cuba (and sometimes Iran) – non-U.S. companies owned or controlled by U.S. person  Anyone who causes a violation

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Jurisdiction

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 Cannot take act indirectly that cannot be taken directly

  • Authorizing, financing, guaranteeing
  • Referring business opportunity
  • Changing procedures
  • Exporting marketing services

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No Facilitation

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Export Controls

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 Who?

  • U.S. Department of Commerce, Bureau of

Industry and Security (BIS)

 Where?

  • Export Administration Regulations (EAR)

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Commercial Exports

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 What?

  • Commercial items and technology
  • U.S. origin items, wherever located
  • Items in the United States
  • Some items that incorporate U.S. origin

items, technology, or software

  • Exports / re-exports

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Commercial Exports (cont’d)

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 How?

  • Destination, end-use, end-user controls
  • License exceptions
  • Licenses

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Commercial Exports (cont’d)

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Cuba Sanctions

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 Statutory embargo in place since 1960  Prohibitions on most exports / imports of goods, services, and technology and financial transactions  Travel ban  Designation as State Sponsor of Terrorism

  • Restricted U.S. foreign assistance, exports and sales, access to

U.S. financial market

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History

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 Removed as State Sponsor of Terrorism  Renewed diplomatic relations  Regulatory amendments

  • January 2015, September 2015, January

2016, March 2016

  • Eased export and sanctions restrictions

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Recent Actions

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 “Support for the Cuban People” (SCP)

 EAR99 or AT-controlled tools, materials, and equipment  E.g., for use by private sector

 “Consumer Communications Devices” (CCD)

 Telecommunications devices and software

 “Aircraft, Vessels, and Spacecraft” (AVS)

 Temporary sojourn  Equipment and spare parts

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Export License Exceptions

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 Environmental protection  Safety of civil / commercial aviation  Agriculture  Promotion of independent activity to strengthen civil society in Cuba  Use by U.S. news bureaus  Food processing  Public health and sanitation

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Liberalized Licensing

 Residential construction and renovation  Public transportation  Construction of facilities for treating public water supplies, supplying electricity / energy, sports / recreation facilities, and other infrastructure  Wholesale and retail distribution for domestic consumption by the Cuban people

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 Transactions incident to export / re- export of items consistent with BIS licensing policy

  • Market research
  • Commercial marketing
  • Sales or contract negotiation
  • Accompanied delivery
  • Installation
  • Leasing
  • Servicing

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Authorized Transactions

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 Certain goods / services produced by independent Cuban entrepreneurs  Cuban-origin software and mobile applications  Authorized travelers can import up to $400 in Cuban goods – including up to $100 in alcohol or tobacco products

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Authorized Imports

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OFAC-Authorized Travel

 Family visits  Official business of the U.S. government, foreign governments, and certain intergovernmental organizations  Journalistic activity  Professional research and professional meetings  Educational activities / people-to-people travel  Religious activities

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 Public performances, clinics, workshops, athletic and other competitions, and exhibitions  Support for the Cuban people  Humanitarian projects  Activities of private foundations or research or educational institutes  Exportation, importation, or transmission of information or informational materials  Other authorized export transactions

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Travel (cont’d)

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 Authorized travel and carrier services (e.g., travel agents and airlines)  Blocked space, code sharing, and leasing arrangements

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Travel-Related Transactions

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 Transactions to provide telecommunications services linking third countries and Cuba and in Cuba  Services incident to internet-based communications and related to certain exports / re-exports of communications items

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Telecommunications

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 Credit and debit cards in Cuba for authorized travel  Certain micro-financing activities  U-turn payments through the U.S. financial system  Processing of U.S. dollar monetary instruments presented indirectly by Cuban financial institutions  Certain bank accounts on behalf of a Cuban national

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Financial Transactions

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 Official government business in Cuba  Hiring Cuban nationals / paying salaries  Establishing business / physical presence in Cuba for authorized purposes  Legal services

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Other Authorizations

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 Persons subject to U.S. jurisdiction are still prohibited from engaging in most transactions involving Cuba or Cuban nationals, unless authorized by a general or specific license  Exports / re-exports of U.S.-origin items to Cuba require a license unless authorized by a license exception

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Remember!

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Leveraging New Opportunities

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 Aviation  Construction  Automotive  Agriculture  Tourism  Telecommunications

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Key Industries

 Public health  Energy  Infrastructure  Public transportation  Environmental protection

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 Professional Research

  • Information gathering
  • Attending professional meetings

 Export-related transactions

  • Marketing, contract negotiation, etc.

 Evolving opportunities

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Business Development

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 Limited private sector  Complicated Cuban regulations  Reluctant U.S. financial institutions  Low consumer demand / purchasing power  No independent legal bar  Difficulty enforcing contracts / collecting debts  Endemic corruption

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Practical Challenges

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 CarCo Mexico (CCM) is the non-U.S. subsidiary of CarCo U.S.  CCM manufactures pick-up trucks in Mexico.  Can CCM sell the trucks to the Cuban people? To the Cuban government?

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Non-U.S. Subsidiaries

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 AirCo Canada (ACC) sells aircraft and parts to Cuba.  Can ACC’s U.S. subsidiary

  • Send personnel to Cuba to research the

aircraft industry?

  • Share information learned with ACC?
  • Negotiate / enter into contracts?
  • Sell aircraft / parts to Cuba?

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Business Development

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 Can U.S. Cruise Ship Co.

  • Transport U.S. travelers to Cuba?
  • Transport non-U.S. travelers?
  • For what purpose(s)?
  • Dock at Cuban port?
  • Use U.S. origin ship?
  • Provide entertainment on board?

 Compliance obligations?

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Tourism

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Compliance Best Practices

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 Penalties

  • Significant monetary fines
  • Prison for individuals
  • Designation as prohibited party

 Reputational damage  Business risk

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Importance of Compliance

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Compliance Measures

 Tone at the top  Policy and procedures  Screening  Training  Transaction due diligence  Self-assessment  Process to handle violations  Recordkeeping  Auditing / Monitoring

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 Commit to compliance  Keep eyes open for red flags

  • Need not be an expert but . . .
  • Report potential issues

 No retaliation for good faith reports

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Personnel Responsibilities

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 Consult prior to engaging in any transactions involving Cuba  Review all contracts regarding actual / potential Cuba business  Train personnel

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Legal Department

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Thank You!

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Jeff Kruszewski O: (202) 442-2716 jeffrey.kruszewski@usbank.com Thad McBride O: (202) 827-2959 C: (202) 253-2518 tmcbride@bassberry.com Cheryl Palmeri O: (202) 827-2967 C: (310) 909-3195 cpalmeri@bassberry.com