U.S. Individuals and Companies Prohibited from Engaging in Transactions with Cubans, Including Cuban Athletes, unless Certain Narrow Exemptions Apply

Alan M. Dunn, a partner with the Washington, D.C. based international trade law firm of Stewart and Stewart, clarifies U.S. sanctions against doing business with Caribbean nations

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Under U.S. law, all U.S. individuals and companies are prohibited from engaging in any transactions with any Cubans, including Cuban athletes such as baseball and soccer players, unless certain narrow exemptions apply

Washington, DC (PRWEB) October 10, 2013

Despite Cuba’s recent announcement that its athletes from all sports will soon be able to sign contracts with foreign leagues, an apparent effort to prevent Cuban athletes from defecting to other countries, the change in policy does not affect U.S. sanctions against doing business with the Caribbean nation.

“Under U.S. law, all U.S. individuals and companies are prohibited from engaging in any transactions with any Cubans, including Cuban athletes such as baseball and soccer players, unless certain narrow exemptions apply,” said Alan M. Dunn, a partner with the Washington, D.C. based international trade law firm of Stewart and Stewart. All assets, property, and bank accounts of Cuban nationals are “blocked,” said Dunn, a former U.S. assistant secretary of commerce who focuses on import and export control issues.

U.S. regulations provide an exemption permitting transactions with Cuban nationals who have qualified for a specific or general license from the Treasury Department’s Office of Foreign Assets Control (OFAC) to be “unblocked,” Dunn said. Anyone engaging in transactions with Cuban nationals where a license has not been obtained that unblocks the individual may face severe criminal and civil fines and imprisonment.

The United States has imposed comprehensive and substantial sanctions against Cuba under the Trading With the Enemy Act. Specifically, the sanctions imposed under that act generally prohibit all persons subject to U.S. jurisdiction from engaging in transactions with Cuban nationals wherever they are located, unless such Cuban nationals have been unblocked or the transaction is otherwise authorized by OFAC. U.S. jurisdiction covers U.S. citizens and residents, persons within the United States, U.S. entities, foreign branches and subsidiaries of U.S. entities, and persons engaging in transactions that involve property subject to the jurisdiction of the United States, Dunn said.

Criminal penalties for a violation of the Cuba sanctions regulations range up to 10 years in prison and fines of up to $1,000,000 for corporations and $250,000 for individuals, or twice the amount of the gain or loss from the violation. Civil penalties of up to $65,000 per violation may also be imposed.

Cuban nationals who have taken up permanent residence outside of Cuba can apply to OFAC to be specifically licensed as unblocked nationals. This requires certain evidence that the Cuban national has established permanent residence outside of Cuba or that the Cuban national does not intend to, or would not be welcome to, return to Cuba, Dunn said.

Once a Cuban national is unblocked, persons subject to U.S. jurisdiction may engage in transactions with that Cuban national, but must maintain full and accurate records of those transactions for five years and, upon request from OFAC, furnish information regarding such transactions. The unblocked Cuban national is deemed “a person within the United States” and must comply with the U.S. sanctions regulations, Dunn said.

In certain circumstances the regulations also permit general licenses — under which certain Cuban nationals are unblocked without the need for a written application to OFAC. However, recent reports indicate that Major League Baseball requires that all Cuban players receive specific unblocking licenses from OFAC before signing with a team. Obtaining a specific license in the form of a document from OFAC also has benefit of giving U.S. entities confidence that the Cuban national has been unblocked, which is an important safeguard to all U.S. persons engaging in any transactions with the Cuban national, whether it is a sports team, sponsors, or any other U.S. person, Dunn said.

After the Cuban government’s announcement, the Baseball commissioner’s office was quoted in the Miami Herald as saying, “Given that we do not have any details of this change in policy, it would be premature for us to speculate what effect it may have.... MLB and its clubs have and will continue to act in accordance with the laws and policies of the United States government."

There were 21 Cuban players on Major League Baseball rosters this year, including outfielder Yasiel Puig, who signed a $42 million, seven-year contract with the Los Angeles Dodgers in July 2012, and pitcher Aroldis Chapman, who signed a $30.25 million, six-year deal with the Cincinnati Reds in 2010.

About Stewart and Stewart
For 50 years, the firm of Stewart and Stewart has helped companies, workers, and governments succeed amid the complexities and rapid change of international trade. Stewart and Stewart are proud of their tradition of integrity, expertise, and creative approach to the law in such areas as trade remedies, customs, and international trade agreements. Today, more than ever, globalization is creating spectacular new opportunities and posing daunting new challenges for U.S. farmers, manufacturers and service companies. Stewart and Stewart enters its next half century blessed with a talented and tested team to assist clients in competing at home and around the world so they can create the jobs and innovations of tomorrow, survive potential challenges or crises and overcome obstacles and distortions in the marketplace.

Stewart and Stewart is a member of the International Society of Primerus Law Firms.


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