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

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 | 10am Pacific Today’s faculty features: 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. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Doing Business in Cuba: Navigating the Evolving Sanctions Landscape, Leveraging New Opportunities Strafford Publications April 12, 2016 5

Who We Are  Jeff Kruszewski – Vice President and Senior Corporate Counsel, U.S. Bank  Thad McBride – Partner, Bass Berry & Sims  Cheryl Palmeri – Associate, Bass Berry & Sims 6

Agenda  Regulatory Overview  Cuba Sanctions  Recent Changes  Leveraging New Opportunities  Compliance Best Practices 7

U.S. Sanctions 8

Sanctions Overview  Who?  U.S. Treasury Department, Office of Foreign Assets Control (OFAC)  What?  Restrict transactions with certain countries and individuals 9

Overview (cont’d)  How?  Broad prohibitions – exports / imports of goods / services • Statutes, Regulations, Executive Orders, Guidance  Licenses • General – basically an exception • Specific – must apply 10

Jurisdiction  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 11

No Facilitation  Cannot take act indirectly that cannot be taken directly  Authorizing, financing, guaranteeing  Referring business opportunity  Changing procedures  Exporting marketing services 12

Export Controls 13

Commercial Exports  Who?  U.S. Department of Commerce, Bureau of Industry and Security (BIS)  Where?  Export Administration Regulations (EAR) 14

Commercial Exports (cont’d)  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 15

Commercial Exports (cont’d)  How?  Destination, end-use, end-user controls  License exceptions  Licenses 16

Cuba Sanctions 17

History  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 18

Recent Actions  Removed as State Sponsor of Terrorism  Renewed diplomatic relations  Regulatory amendments  January 2015, September 2015, January 2016, March 2016  Eased export and sanctions restrictions 19

Export License Exceptions  “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 20

Liberalized Licensing  Environmental protection  Safety of civil / commercial aviation  Residential construction and renovation  Agriculture  Public transportation  Promotion of independent activity  Construction of facilities for treating public to strengthen civil society in Cuba water supplies, supplying electricity / energy, sports / recreation facilities, and other  infrastructure Use by U.S. news bureaus   Food processing Wholesale and retail distribution for domestic consumption by the Cuban people  Public health and sanitation 21

Authorized Transactions  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 22

Authorized Imports  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 23

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 24

Travel (cont’d)  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 25

Travel-Related Transactions  Authorized travel and carrier services (e.g., travel agents and airlines)  Blocked space, code sharing, and leasing arrangements 26

Telecommunications  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 27

Financial Transactions  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 28

Other Authorizations  Official government business in Cuba  Hiring Cuban nationals / paying salaries  Establishing business / physical presence in Cuba for authorized purposes  Legal services 29

Remember!  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 30

Leveraging New Opportunities 31

Key Industries  Aviation  Public health  Construction  Energy  Automotive  Infrastructure  Agriculture  Public transportation  Tourism  Environmental protection  Telecommunications 32

Business Development  Professional Research  Information gathering  Attending professional meetings  Export-related transactions  Marketing, contract negotiation, etc.  Evolving opportunities 33

Practical Challenges  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 34