OFAC Expands Cuba Sanctions, Targeting the Hospitality, Alcohol, and Tobacco Industries – Lexology

On September 24, 2020, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published amendments to the Cuban Assets Control Regulations (CACR) prohibiting U.S. persons from engaging in a variety of travel and hospitality-related activities. Effective immediately, U.S. persons will no longer be able to patronize hotels or other lodging properties owned or controlled by the Cuban government, or import Cuban alcohol or tobacco products into the United States when returning from Cuba. Additionally, U.S. persons will no longer be authorized to engage in transactions related to travel to Cuba for conferences, professional meetings, and other large group gatherings. These changes continue President Trump’s policy of tightening sanctions on Cuba to deprive the Cuban government of revenue by making it more difficult for Americans to travel to Cuba or participate in the Cuban economy.

The principal amendment to the CACR is a new provision prohibiting any person subject to U.S. jurisdiction from lodging, paying for lodging, or making any reservation for or on behalf of a third party to lodge at any property in Cuba that is identified as owned or controlled by the Cuban government or certain Cuban government-related individuals. The State Department will be publishing a list of properties that meet these criteria in a new list, the Cuba Prohibited Accommodations List (the CPA List). The CACR amendments also alter existing general licenses to exclude transactions related to the CPA List from the scope of those general licenses.

OFAC has also removed the existing authorizations for Cuba travel transactions related to professional meetings, conferences, public performances, clinics, workshops, and athletic or non-athletic competitions. Transactions related to these activities will now be required to go through the OFAC specific licensing process and will be reviewed on a case-by-case basis.

Finally, the amendments also revoke previous authorizations relating to the importation of alcohol or tobacco products from Cuba. Previously, when returning from Cuba or a third country, a U.S. person was allowed to import Cuban-origin products, including alcohol and tobacco, in non-commercial quantities for personal use. These authorizations have now been amended to prohibit the importation of Cuban-origin alcohol and tobacco products.

These amendments take aim at certain profitable sectors of the Cuban economy: the hospitality/conference industry, the rum industry, and the cigar industry. They continue the general policy of tightening sanctions on Cuba outlined by President Trump in a 2017 National Security Presidential Memorandum. Treasury Secretary Mnuchin stated that these amendments are in response to the Cuban regime “redirecting revenue from authorized U.S. travel for its own benefit, often at the expense of the Cuban people.” OFAC also issued updated FAQs related to these changes.