A spokesman for the Treasury Department’s Office of Foreign Assets Control (“OFAC”) told Export Law Blog this morning that discussions between OFAC and the North Pole over Santa Claus’s Christmas Eve itinerary had once again broken down and were not expected to be resumed before Santa’s scheduled departure on December 24 at 10 pm EST.

The dispute arose from a dilemma that the U.S. sanctions against Cuba posed for Santa’s planned delivery of toys to children in Cuba. If Santa delivers toys for U.S. children first, there will be toys destined for Cuba in the sleigh in violation of 31 C.F.R. § 515.207(b). That rule prohibits Santa’s sleigh from entering the United States with “goods in which Cuba or a Cuban national has an interest.” On the other hand, if Santa delivers the toys to Cuban children first, then 31 C.F.R. § 515.207(a) prohibits the sleigh from entering the United States and “unloading freight for a period of 180 days from the date the vessel departed from a port or place in Cuba.”

A press release from the North Pole announced that the OFAC rules left Santa no choice but to bypass the children of the United States this Christmas. A spokesman from OFAC warned that if Santa attempted to overfly the United States, his sleigh would be forced to land and his cargo seized. He continued:

We know that the outcome is harsh, but we cannot allow the Cuban regime to continue to be propped up by Santa’s annual delivery of valuable Christmas toys to Cuban children. We also note that the proposed rule that might in the future allow entry into the United States by sleighs that were on humanitarian missions in Cuba is not yet in effect and may still be overruled by Congress.

Congressional leaders did not return our calls.

This post is an annual tradition and appeared previously in 2007, 2008, 2009, 2010, 2011, 2012 and 2013 in slightly altered form. Alert readers will notice a small addition to this year’s post.

Export Law Blog would like to take the opportunity of this post to extend its best holiday wishes to all of its readers. Posting will be light between now and the end of the holidays.

Global health care consortium Bupa agreed to cough up (sorry!) $128,704 to the Office of Foreign Assets Control to settle allegations that it provided health insurance to individuals on the SDN List and, in one instance, re-imbursed a policy holder for medical treatment received in Cuba. You might have assumed that there were limits to the injury that OFAC might try to inflict on SDNs or non-SDNs traveling in Cuba but you would, apparently, be wrong.

The SDN involved was designated under the Foreign Narcotics Kingpin sanctions. Unlike the Narcotics Trafficking Sanctions Regulations, the Kingpin Sanctions regulations do not provide an exception even for emergency medical services. (Of course, even though emergency medical services can be provided to SDNs under the Narcotics Trafficking Sanctions, the hospital or doctor cannot be paid for those services without an OFAC license authorizing such payment. Good luck getting treated in those circumstances.)

So the penalties for being a Narcotics Kingpen  extend far beyond simply having your bank account blocked and, potentially, can include dying from lack of needed medical care. I have no special sympathy for narcotics kingpens, but this seems a little harsh.

Trying to interfere with the health care of people traveling Cuba seems even harsher. Moreover, penalizing the reimbursement of a non-Cuban outside Cuba for services previously provided in Cuba seems not to further the U.S. policy of depriving Cuba of resources given that the payment in Cuba was already made. It also illustrates the strained reading that OFAC gives to the Cuban Assets Control Regulations in its effort to penalize anything and everything that has any connection with Cuba.

The fundamental prohibition of the Cuba sanctions prohibits U.S. persons from participating in “transactions [that] involve property in which … [a Cuban] national … has at any time … [or] had any interest of any nature whatsoever, direct or indirect.” Of course, no Cuban national has an interest in the insurance policy under which the reimbursement payment was made. The only such property in that case would have been the funds paid by the policy holder to the Cuban health care provider. To say that the reimbursement transaction “involves” that property obviously stretches the meaning of “involves” to the breaking point, but it shows how broadly OFAC reads these regulations to assure that if you blow your nose and someone in Cuba hears the noise, you’ve violated the rules.

Back in April 2013, Jay-Z and Beyoncé took a trip to Cuba, which provoked a round of wailing, teeth gnashing and threats of jail time from the usual suspects on the Hill, namely, certain South Florida members of Congress, including Rep. Ileana Ros-Lehtinen and Rep. Mario Diaz-Balart, who exhibit a near Pavlovian response anytime they hear the word Cuba. Jay-Z rapped back something to the effect that going to Cuba wasn’t a real crime like buying a kilo for Chief Keef. (If you don’t get the Chief Keef reference, just remember that Wikipedia is your friend in such matters.)

OFAC agreed with Jay-Z and not with Reps. Ros-Lehtinen and Diaz-Balart.  The trip was, OFAC said, a properly licensed “people-to-people” educational exchange tour and, therefore, violated no U.S. laws.

Apparently, the two representatives kept making a commotion about the trip, perhaps believing  that Beyoncé and Jay-Z didn’t qualify for the license because they either weren’t people or weren’t educational.  So the Treasury Department’s Inspector General was called in to review OFAC’s determination that the the famous couple were both people and educational.

In making the determination that OFAC properly declined to fine Jay-Z and Beyoncé for the trip, the Inspector General actually reviewed what Beyoncé and Jay-Z did in Cuba (your tax dollars at work!) and concluded:

Our review found these activities were consistent with the activities for which OFAC authorized the people-to-people license. For example, one article reported the trip included a visit to a children’s theater group and several clubs, where the couple heard live music and occasionally took to the dance floor. According to the article, they also toured Cuba’s top art school, where they met with young artists, and ate at some of Havana’s privately run restaurants, known as “paladares.” One of the city’s leading architects led the couple on an architectural tour of the Old City of Havana, during which the article stated the couple was mobbed by Cuban spectators.

Okay, so let’s suppose that Jay-Z and Beyoncé did nothing in Cuba but lounge on the beach and sip mojitos. What would be the problem with that? Does anyone believe that a regime that has withstood fifty years of U.S. sanctions was on the verge of crumbling but managed to hang on because two pop music stars vacationed in Cuba instead of, say, Aruba?