Archive for the ‘Cuba Sanctions’ Category

Jun

6

U.S. Company Announces Retrieval Service for Cuban Documents

Posted by Clif Burns at 10:01 pm on June 6, 2011
Category: Cuba Sanctions • OFAC

Cuban CertificatesJust how far does the information exception to our economic sanctions programs go? Of course, the traditional response from the Office of Foreign Asset Controls (“OFAC”), the agency that administers the U.S. economic sanctions regimes, is usually “Not very far.” The issue, here, is whether a particular activity is an export of information or an export of services (or some combination of the two.) Sometimes OFAC has tried to draw the distinction by saying that the exception does not apply to information not already in existence, although it makes a somewhat unaccountable (although welcome) exception for magazine subscriptions.

So where does this new Cuban document retrieval service fall? The service advertises that it uses “proprietary” means to retrieve Cuban birth certificates and other official certificates for people in the United States. Retrieving these documents from Cuban archives seems to pose few problems. But the service doesn’t stop there:

All documents retrieved from Cuba for any official use (Cuban passport, driver’s license and marriage applications etc) need to be “legalized” in Cuba in order to be recognized as an official document.

The certificates we provide are legalized with stamps and seals from the Ministerio de Relaciones Exteriores also known as MINREX.

Adding the legalization stamps, seals and other government doohickeys may be what steps over the line, because the retrieval company is not just exporting information already in existence but is taking existing information and providing services to alter it.

Section 515.545 of the Cuban Assets Control Regulations also seems to suggest that the legalization process may be one step too far:

This section does not authorize the remittance of royalties or other payments relating to works not yet in being, or for marketing and business consulting services, or artistic or other substantive
alteration or enhancements to informational materials

The company has said that this plan has been blessed by its lawyers and that they are not obtaining licenses for these transactions. I suppose that in the end the issue is whether the legalization of the document is or is not a “substantive alteration or enhancements.” I would be disinclined to opine to a client on that matter without at least some informal discussions with OFAC. So, I’m assuming that someone in OFAC likely provided at leat an informal reaction to the retrieval plan.

[Posting has been light lately due to demands at work This week my normal posting schedule ought to resume.]

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May

8

Maybe the Hawaiian Vacation Wasn’t Such a Good Idea

Posted by Clif Burns at 3:34 pm on May 8, 2011
Category: Armenia • Cuba Sanctions

Balikbayan BoxJohn Dennis Tang Ong, a Philippine-born Canadian citizen residing in British Columbia, pleaded guilty in federal court last Thursday to charges that he and an accomplice in the Philippines had conspired to export M-4 rifle parts from the United States to the Philippines without a license. According to the indictment, Ong’s accomplice, Ronnell Rivera, a resident of the Philippines, had been communicating with a federal undercover agent in an attempt to purchase the rifle parts from the agent. The plan was that the agent would ship the parts to an address in the United States and that Ong would then arrange for the shipment from the United States to the Philippines. Ong paid for the rifle parts by wiring the purchase price from a bank in the state of Washington to one in Atlanta, Georgia.

At Rivera’s request, Ong sent him an email that provided an address in the state of Washington to which the undercover agent could ship the parts. When the agent was reluctant to ship the parts to that address, Ong suggested, in another email, that the items should be sent by “balikbayan box.”

Although the indictment states, rather comically, that “balikbayan box” is a “freight forwarding company” it is, instead, as the name might suggest, a type of box. The box in question is a corrugated cardboard box of particular dimensions used by expatriate Philippines to send a number of small gifts packed together back to their family in the Philippines. Typically, the boxes are given to freight forwarding companies that specialize in putting these boxes on container ships for cheap, if slow, shipment to the Philippines and then delivering them to the addressees once they arrive. Ong allegedly also noted to Rivera that balikbayan box shippers rarely asked for identification from the shipper.

Ong and Rivera agreed on this plan, so Ong sent an email to Rivera with the address of a balikbayan box shipping company in Atlanta, Georgia, along with the specific dimensions and packing instructions for such a shipment. Rivera then forwarded this information to the undercover agent. Nine months later, Ong was arrested when he arrived in Hawaii for a vacation.

Although the indictment states that Ong traveled to the United States from time to time to arrange for exports from the United States to the Philippines, there are no allegations in the indictment that any of the activities at issue in the indictment occurred in the United States. It seems that instead all activities relating to this export by Ong occurred while he was in British Columbia. There seems a good chance that Canada would not have recognized that the U.S. had jurisdiction over Ong or permitted his extradition. In retrospect, Ong probably regrets his choice of Hawaii as a vacation spot.

After Ong’s guilty plea, Ong and the government stipulated to a judicial order of his removal to Canada, which means that his only incarceration will likely be time already served. His co-defendant Rivera is, as they say, still at large. He’s probably not thinking about a vacation in the United States. Ever.

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Apr

13

OFAC Says Nyet to Irish-American Musicians in Cuba

Posted by Clif Burns at 4:56 pm on April 13, 2011
Category: Cuba Sanctions

Banda de Gaitas de La HabanaIf you’ve been staying awake at night worried about Cuban terrorist attacks in your neighborhood, you can sleep better now. The Office of Foreign Assets Control (“OFAC”) has denied a request by Irish-American musicians to travel to Cuba to learn terrorist-influenced dance steps at the Second Annual Celtic Festival in Cuba. In addition to fighting international terrorism, the OFAC decision will also prevent the lavishly wealthy American Celtic musicians from spreading their vast sums of money around in Cuba, which would, if permitted, have further propped up the current regime there.

The artists applied for a license, which OFAC denied on April 7, barely a week before the festival in Havana was to begin. The festival, sponsored by Cuba and Culture Ireland, features Celtic musicians from Ireland and Cuba. (Somewhat remarkably Cuban descendants of immigrants from Gaelic provinces in Northern Spain maintain a lively tradition of Celtic music in Cuba).

According to the above-linked report in IrishCentral.com, the license was denied because it went “beyond the scope of what was authorized” in the 2004 Guidelines on Cuba travel issued by the Bush administration as part of an initiative to cut back on U.S. travel and personal remittances to Cuba. Although the IrishCentral report doesn’t indicate how the request exceeded those guidelines, it is not hard to figure out.

Licenses are not granted to individuals to participate in Cuban-organized international festivals inasmuch as the proposed participation goes beyond the direct, bilateral interaction between U.S. and Cuban nationals contemplated by this licensing provision.

In other words, the Irish-American musicians can’t go to the Cuban festival because there will be Irish people there.

Back in January 2011, President Obama announced that the travel guidelines would be amended “[t]o enhance contact with the Cuban people and support civil society through purposeful travel, including religious, cultural, and educational travel.” The Cuba page on the OFAC website footnotes the link to the 2004 Guidelines with the statement that they are “presently being updated to reflect January 2011 policy changes.” The denial of this license suggests that the revised guidelines will retain the silly requirement that cultural exchanges in Cuba may only be bilateral. No Irish (or other foreigners) need apply — as they used to say.

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Feb

22

OFAC Protects US From Sarasota-Havana Regatta For Another Year

Posted by Clif Burns at 5:41 pm on February 22, 2011
Category: Cuba Sanctions

Sarasota-Havana RegattaFile this under the category of all the ways that OFAC helps me sleep better at night. The Sarasota Yacht Club, which was probably founded by Che Guevara, cooked up a scheme to threaten U.S. national security by having a bunch of wealthy yacht owners sail some boats in May to Cuba, something that had wisely not been permitted since 1994. As proof of their devious intentions, the yacht club asked the Office of Foreign Assets Control for permission to conduct this revolutionary regatta. Well, you will be pleased to know that OFAC bravely acted on this request by sitting on it until the deadline for organizing the regatta expired. You can breathe that sigh of relief now.

The club had signed up 184 boats and had hoped that the regatta would provide a little boost to the Sarasota economy. Now they’re going to Miami instead.

Interestingly the previously-linked article on OFAC’s refusal to permit the regatta to proceed, made no mention of any request by the boat owners to get approval from the Bureau of Industry and Security (“BIS”) for the exports of the 184 boats to Cuba. (Sailing a U.S. vessel into Cuban waters, even if only temporarily, is considered an export of that boat to Cuba.) OFAC licenses travel to Cuba and BIS licenses exports of U.S. goods to Cuba. As this blog reported a few years back, BIS fined one boat owner for exporting his boat to Cuba in connection with the ill-fated Conch Republic Regatta from Key West to Havana. So not only did OFAC’s inaction protect the U.S. from the Cuban threat to our national security, but also it may have protected boat owners who thought they could blithely sale to Cuba just because OFAC had said so, if it had in fact said so.

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Nov

9

U.K. Banks Backpedal On Domestic Enforcement of U.S. Cuba Sanctions

Posted by Clif Burns at 7:05 pm on November 9, 2010
Category: Cuba Sanctions • EU • Foreign Countermeasures

Cuban Postage StampThis blog reported several weeks ago on a complaint brought by a small British company against Lloyds for refusing to cash a check in pounds sterling that the company had received from a Cuban customer. Lloyds had previously agreed to pay $217 million to the U.S. Office of Foreign Assets Control (“OFAC”) in connection with fraudulent activities by the bank in order to process payments from sanctioned countries, including Cuba, through U.S. correspondent banks. However, the check that was declined by Lloyds was not denominated in U.S. dollars, did not involve a U.S. customer, and was being cashed outside the United States, meaning that neither the Lloyd’s settlement agreement with OFAC nor OFAC’s own regulations would prohibit the U.K. bank from processing the payment. More significantly, its refusal to cash the check could be seen as a violation of E.U. Council Regulation No. 2271/96 , which forbids companies in the E.U. from complying with the U.S. sanctions on Cuba.

According to an article on the website of London broadsheet The Daily Telegraph, some U.K. banks may be walking back, at least slightly, from a hard and fast policy of not processing Cuban payments for fear of OFAC reprisal. Interestingly, the article notes that part of the banks’ hesitance arises from “US attempts to extradite British executives it claims have breached sanctions” and “the failure of the British Government to provide protection against extradition.” This is presumably a reference to the pending extradition request against Christopher Tappin for his involvement in an attempted export of batteries from the United States to Iran.

The Telegraph article suggests that British authorities have been in contact with Lloyds and other banks after receiving a number of complaints from customers that could not clear Cuba checks. One case involved a customer whose account was closed by Bank of Scotland when the customer would not provide assurances that it would not receive Cuban payments in its account.

Now, presumably as a result of these official contacts, even Lloyds may be softening its hard line on Cuba transactions. The Telegraph reporter Roland Gribben signals this change in the following fractured sentence that suggests he may not have a very clear grasp of export law himself.

If the Cuban bank does not infringe OFAC regulations or has dealings with Specially Designated Individuals who can be either individuals, entities or banks, then Lloyds may be willing to process a payment from Cuba provided it was in sterling.

Probably what Lloyds was saying before Mr. Gribben garbled their statement was that Lloyds would process checks in pounds provided that parties on OFAC’s List of Specially Designated Nationals and Blocked Persons were not involved in the transaction.

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