One of the things that pops out from the State Department’s Naughty List of Cuban businesses is all the beverage companies on it, which seems odd. I mean, honestly, how much can American tourists spend on TropiCola? How much of that will wind up in the pockets of Cuban spies and the Cuban military? Is the Cuban military going to crumble when it can’t sell TropiCola to American tourists?

On the list are Najita (orange soda), Cachito (sparkling lemonade), TropiCola, and rum producers Ron Caney and Ron Varadero. Havana Club Rum, the gold standard of Cuban rum, is, inexplicably, not on the Naughty List.

The relevant regulation here is the new section 515.209 of the Cuban Assets Control Regulations (“CACR”) which forbids “direct financial transactions” with any entity on the Naughty List. But don’t pin your hopes on the word “direct” because we’re talking OFAC here and we’re in the Upside Down where direct actually means indirect. When you buy TropiCola from a street vendor, that’s a direct transaction in the Upside Down where OFAC lives and an indirect transaction in the normal world.

For purposes of this prohibition, a person engages in a direct financial transaction by acting as the originator on a transfer of funds whose ultimate beneficiary is an entity or subentity on the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List”) … , including a transaction by wire transfer, credit card, check, or payment of cash.

So, when you give cash to bar in Havana to purchase a Cuba Libre made with Caney Rum and TropiCola, the ultimate beneficiaries are, arguably, TropiCola and Ron Caney. Perhaps an argument could be made that since both companies have already been paid, they aren’t the ultimate beneficiary of your payment to the bar. But, if section 515.209 of the CACR only applies when you buy Tropicola or Caney Rum directly from the bottler, why include them on the Naughty List? What U.S. tourist will ever deal directly with the bottler?

And since we made a trip to the Upside Down, I am compelled to add one thing: #JusticeForBob (spoiler alert!).

Photo Credit: Tropi Cola by Markus L [CC-BY-NC-2.0 (https://creativecommons.org/licenses/by-nc/2.0/)], via Flickr https://flic.kr/p/egCzwi [cropped and processed]. Copyright 2010 Markus L

The Office of Foreign Assets Control (“OFAC”) today announced the long-awaited (or, perhaps more accurately, long-feared) amendments to the Cuban Assets Control Regulations designed to limit travel by U.S. persons to Cuba. (U.S. persons remain free to travel without restriction to the China, Russia, the Philippines, Saudi Arabia, Burma, Zimbabwe and other countries run by dictators that systematically and egregiously violate human rights, but that’s another story.)

The changes are pretty much what had been anticipated. Financial transactions with listed companies in the Cuban military, intelligence, or security services sector are forbidden, meaning that many hotels and shops in Cuba will be off-limits to U.S. travelers. The full State Department list can be found here.  The rules leave the non-travel liberalizations that occurred during the last administration pretty much in place.

Interestingly, it appears that El Floridita, the legendary daiquiri factory and Hemingway haunt in Old Havana, was spared, even though it is almost certainly owned by GAESA, the military conglomerate with tentacles throughout the Cuban economy and the target of the new restrictions. So, for the moment at least, any American who makes it to Cuba won’t go to jail for stepping inside El Floridita.

And, of course, the biggest loophole that allowed U.S. travel to Cuba – self-guided “people-to-people” tours – was closed up. Or maybe not.

The general license for people-to-people tours is still available but the travel must be conducted under the auspices of an organization. Section 515.565(b) now states that people-to-people travel is authorized provided that it occurs “under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact.” Additionally, the rule now requires that an “employee, paid consultant, agent, or other representative of the sponsoring organization accompanies each group traveling to Cuba.” This employee must “ensure that each traveler has a full-time schedule of educational exchange activities.”

Do you see where I’m going on here? I mean let’s say that you and several other U.S. friends want to go to Cuba. What would prevent you from, say, forming a non-profit in your home state with a charter saying that the non-profit’s purpose is to promote people-to-people travel to Cuba? And then draft an employment agreement between one of the friends and the new non-profit? Then, off you go, to sip daiquiris at El Floridita as long as you don’t stay in Hotel Ambos Mundos (where Hemingway finished Death in the Afternoon and started To Have and Have Not).

Certainly, you must be thinking, there must be something to prohibit this. But no, there is not. The new FAQ 16 addresses the question “[w]hat is an “organization” in the people–to-people context?” It simply repeats the definition that such an organization is subject to U.S. jurisdiction and sponsors exchanges promoting people-to-people contact. FAQ 16 also makes clear that you can’t even have your home-brew non-profit apply for an OFAC license just to make sure you’re okay.

To the extent proposed travel falls within the scope of an existing general license, including group people-to-people educational travel, organizations subject to U.S. jurisdiction may proceed with sponsoring such travel without applying to OFAC for a specific license. It is OFAC’s policy not to grant applications for a specific license authorizing transactions where a general license is available

Because the rules say that this organization sponsors “exchanges,” you’re going to have to make two trips, I suppose, but beyond that it certainly seems to me that enterprising travelers can still do people-to-people tours without having to pay a million dollars to the Smithsonian to go on one of their tours and get trapped on a tour bus with Bob and Ethel Plimsdale.

¡Buen viaje!

Photo Credit: El Floridita by Miss Bono [CC-BY-SA-3.0 (https://creativecommons.org/licenses/by/3.0/], via https://en.wikipedia.org/wiki/File:El_Floridita.jpeg [cropped]. Copyright 2013 Miss Bono