Financial Crime World

Cuba: A New Frontier for US Businesses, But Compliance Remains Key

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As the United States and Cuba continue to normalize their relations, new opportunities are emerging for American businesses to enter the Cuban market. However, with these new opportunities come significant compliance risks that must be carefully managed.

Historical Background

Since the early 1960s, Cuba has been a no-go zone for most US companies due to economic sanctions imposed by the US government. In December 2014, President Barack Obama announced policy changes that have slowly begun to ease those restrictions. The Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) are now implementing regulations to reflect these policy shifts.

New Regulations and Opportunities

Under the new regulations, US businesses can now export certain items to Cuba, including:

  • Building materials for private construction projects
  • Equipment for private sector agricultural production
  • Telecommunications equipment and software

Additionally, authorized exporters, telecommunications service providers, and media bureaus can:

  • Establish a physical presence in Cuba
  • Set up bank accounts
  • Use US credit and debit cards
  • Travel to the country for authorized purposes

Compliance Remains Key

Despite these changes, many US commercial restrictions remain in place, and enforcement of economic sanctions continues. In October 2015, French bank Crédit Agricole was forced to pay $787 million in criminal and civil penalties for violating sanctions on Cuba between 2003 and 2008.

To ensure compliance, consider the following key factors:

  • Ensure that operations personnel understand their obligations under US law with respect to Cuba and overseas third parties.
  • Implement suitable controls in place for newly legalized transactions involving Cuba.
  • Maintain accurate and complete records of all transactions and activities related to Cuba, as well as conduct due diligence on local agents and partners.
  • Review the Specially Designated Nationals and Blocked Persons (SDN) list regularly to ensure compliance with US sanctions.

Worth MacMurray, General Counsel and Chief Compliance Officer at GAN Integrity Inc., emphasizes that “just because the sanctions regime against Cuba is easing, it doesn’t mean companies can take a complacent approach to compliance. In fact, it’s more important than ever to stay vigilant and adapt to changing regulations.”

Conclusion

With the re-entry of Cuba into the US commercial sphere, businesses must be prepared to navigate complex compliance issues. As Worth MacMurray and Melanie Reed of GAN Integrity Inc. note, “Cuba’s re-entry into the US commercial sphere is reason for excitement, but it’s also a reminder to step back and consider the compliance implications based on your company’s particular facts and circumstances.”