Cuba Policy Changes Under President Trump
President Trump's National Security Presidential Memorandum recommends alterations to current policy on legal travel to Cuba and financial transactions for both individual U.S. citizens and American companies.
In a departure from the Obama administration’s regulatory changes, this policy aims to reinforce the current economic embargo and tourism bans on Cuba.
Below are the major changes we expect to see under the Trump administration. Please note that the federal rulemaking process for these regulations has not been completed yet, which means these policies are subject to change in the coming months.
1. Prohibits direct financial transactions with Cuban military, security, and intelligence entities.
The State Department will identify a list of entities in Cuba that are controlled by or act on behalf of the Cuban military, intelligence agencies, or security services. Entities will qualify for this list if they are determined to “disproportionately benefit” these Cuban agencies, but the precise definition of the term “disproportionately benefit” is not yet clarified.
U.S. travelers and companies will not be able to engage in financial transactions with any entity on the list, but there will be room for exemptions related to democracy promotion, permissible trade and travel, authorized remittances, telecommunications, and national security.
Hopefully, there will be additional clarification on which financial transactions in particular will be prohibited, either specifying by dollar amount or explaining which transactions count as incidental to authorized travel. This would avoid confusion for American travelers and help prevent accidental violation of the regulation.
This stipulation will not affect existing business contracts or in-progress business deals.
2. Increases restrictions on U.S. travel to Cuba.
Under the “educational” category of permitted travel to Cuba, President Obama established a “people-to-people” general license which allowed individuals to travel to Cuba using their own itineraries. The new policy directive appears to eliminate the “people-to-people” category and instead requires that Americans be accompanied by a U.S. organization that sponsors group exchanges in Cuba.
American travelers using these travel companies must also maintain a full itinerary and financial record during their trip, which they may need to present in a federal audit for up to five years.
3. Increases reporting requirements and stricter monitoring of U.S. traveler activities in Cuba.
The Treasury Department will regularly audit travelers to Cuba to ensure compliance with the new regulations. This process will be overseen by the Inspector General of the Department of Treasury, who will submit reports to the President.
4. Expands targeted sanctions on Cuban nationals.
Currently, “prohibited officials of the Government of Cuba” are senior officials in the Cuban government with whom Americans are barred from engaging in direct financial transactions. This includes remittances from the U.S. The new policy greatly expands the definition of “prohibited officials” to potentially include hundreds of thousands of state employees who do not work directly for the Cuban armed services.
It is unclear whether exceptions will be made for sending remittances to employees below a certain level of seniority, given the fact that the directive also specifically exempts remittances from prohibited financial transactions.
What we do not expect to change:
1. The U.S. will maintain diplomatic ties with Cuba, and embassies in Havana and Washington will remain open.
2. The administration will not reinstate the “wet foot, dry foot” immigration policy.
3. The licensing for other forms of purposeful travel, like business and press, will remain authorized.
4. U.S. business activities allowed under President Obama’s regulatory reforms are still allowed so long as they do not involve direct transactions with the State Department’s list of military-linked entities.
5. The announced policy will not change the authorizations for sending remittances to Cubans who do not appear on the list of prohibited persons.
6. Cuba will remain off the State Sponsors of Terrorism list.
7. The 23 bilateral agreements signed by the U.S. and Cuba under President Obama will remain in effect.