April 21, 2016: OFAC Updates Cuba Sanctions FAQ

Yes. Section 515.584(d) of the CACR authorizes U.S. banking institutions to process funds transfers originating and terminating outside the United States as long as neither the originator nor the beneficiary is a person subject to U.S. jurisdiction. Fund transfers originating and terminating in accounts maintained at foreign branches and subsidiaries of U.S. banking institutions would be consistent with the general license authorization as long as all the other requirements are met. For a complete description of what this general license authorizes and the restrictions that apply, see 31 C.F.R. § 515.584(d).

63. What due diligence is a U.S. banking institution processing an authorized U-turn transaction expected to undertake from a sanctions compliance perspective?

OFAC expects U.S. banks, including their foreign branches and subsidiaries, to conduct due diligence on their own direct customers (including, for example, ownership structure (for entities), proof of citizenship (for individuals), and address information) to confirm that the transactions being processed are consistent with the U-turn general license authorization. All banks, including those acting solely as intermediaries, should screen against OFAC’s SDN List and their own internal filters.

In cases where the remitter or beneficiary of the transaction is not a direct customer, unless a U.S. banking institution that is acting as an intermediary knows or has reason to know that the remitter or beneficiary of a transaction is a person subject to U.S. jurisdiction, the U.S. banking institution may rely on the remitter’s and/or beneficiary’s address as stated in the transaction to determine whether the remitter or beneficiary is a person subject to U.S. jurisdiction.

With regard to transactions where a bank is acting solely as an intermediary and fails to block a prohibited transaction engaged in by a person subject to U.S. jurisdiction, OFAC will consider the totality of the circumstances surrounding the bank’s processing of the transaction, including the factors listed above, to determine what, if any, enforcement action to take against the bank.

Intermediary banks should continue their own internal due diligence measures when processing such transactions, such as screening transactions against OFAC’s SDN List as well their own internal filters. Note, however, that transactions meeting the requirements of 31 C.F.R. § 515.584(d) may be processed notwithstanding the involvement of a specially designated national of Cuba, as defined in 31 CFR § 515.306 in the transaction. 

 

67. If an authorized export to Cuba requires servicing or repair, may a person subject to U.S. jurisdiction import the item into the United States or a third country for such servicing or repair?

1. In general, the importation into the United States, or by a person subject to U.S. jurisdiction into a third country, of an item previously exported or reexported to Cuba is prohibited by the CACR unless authorized by specific license. See 31 C.F.R. § 515.204(a)(2). OFAC considers requests for specific licenses authorizing such importation in connection with the servicing or repair of an item previously exported or reexported to Cuba on a case-by-case basis, and may in appropriate circumstances consider requests by an applicant for authorization to conduct multiple such transactions over a specified time period. Department of Commerce authorization would be required to return the item to Cuba after the servicing or repair if the item is subject to the Export Administration Regulations (EAR) (15 C.F.R. Parts 730-774).
2. In addition, certain export and reexport authorizations issued by the Department of Commerce require the return of exported or reexported items to the United States or to a third country. This includes, for example, certain authorized temporary exports and certain parts replaced on a one- for-one basis pursuant to License Exception Servicing and Replacement of Parts and Equipment (RPL). Where the importation of items previously exported or reexported to Cuba into the United States or by a person subject to U.S. jurisdiction into a third country is required as a condition of a Department of Commerce export or reexport authorization, these transactions are authorized by § 515.533(a) of the CACR.

68. May a person subject to U.S. jurisdiction export or reexport to Cuba items that include U.S.-origin content, but are not 100 percent U.S.-origin?

1. Persons subject to U.S. jurisdiction may engage in all transactions ordinarily incident to the exportation or reexportation of 100 percent U.S.-origin items from a third country to Cuba, consistent with the export licensing policy of the Department of Commerce. Items that are not 100 percent U.S.-origin would require OFAC authorization, which would be subject to certain statutory restrictions. 

80. May persons subject to U.S. jurisdiction provide certain insurance-related services (such as cargo or hull insurance, or reinsurance) to persons subject to U.S, jurisdiction who are engaging in authorized activity in Cuba?