After President Obama's historic visit to Havana, many Americans are excited about greater trade and travel opportunities to the island. For good reason: Cuba is an alluring place, and new regulations issued by the Obama administration now permit an unprecedented level of economic activity by U.S. interests. But amid the optimism, U.S. businesses and individuals must be mindful of the risks — as well as rewards — of greater engagement.
As a student at the University of Havana in 2002, I saw firsthand what a challenging environment Cuba can be. The Castro regime exerts total control over almost every aspect of daily life. Poverty on the island is endemic. Free speech is forbidden. Infrastructure is decayed.
All of which is to say, Cuba will not be an easy place for U.S. companies to do business. For companies and individuals considering trade or travel to Cuba, here are just a few things to keep in mind.
First, the embargo is still in place. This means that many economic transactions are still prohibited for U.S. activities. Only Congress has the power to repeal the legislation that underpins the embargo.
Until the embargo is lifted, any economic transactions involving Cuba must be authorized by a license, either general or specific. In most cases these licenses will be issued by the Department of Treasury's Office of Foreign Assets Control (OFAC) or Commerce's Bureau of Industry and Security (BIS). Penalties for violating the embargo can include stiff fines and even criminal charges.
The good news is that OFAC and BIS have done nearly everything in their power to authorize travel and trade within the limits of existing law. Since Presidents Obama and Raul Castro announced a path of normalization in December 2014, OFAC and BIS have issued five sets of regulatory amendments that significantly expand the types of licensed activities. Here are just a few of the highlights:
Travel
The most recent round of regulations permits so-called people-to-people exchanges by individuals. Practically speaking, this means that individuals no longer have to travel to Cuba as part of a licensed group. For businesses seeking to carry out permitted economic activities, travel to Cuba is also permitted, including for sales or marketing purposes.
Financial transactions
U.S. banking institutions can engage in certain Cuban-related transactions that involve Cuban parties, as long as the beneficiaries are not U.S. persons. The rules also increase the remittances that U.S. persons can send to Cuba, permit the use of U.S. credit and debit cards on the island, and allow U.S. financial institutions to open correspondent accounts with Cuban counterparts.