Late last week, President Trump issued a directive that would purportedly “cancel” the recent changes in the Cuban Assets Control Regulations made under President Obama’s administration. This announcement caused confusion in the business community, which had relied on the Obama administration’s changes to begin commercial engagement in Cuba. Even though the directive actually leaves many of the Obama administration’s policies in place, the new directive – once implemented – will likely create issues for U.S. businesses in Cuba.
The directive is designed to ensure that Cuba’s Grupo de Administracion Empresarial (“GAESA”), a business conglomerate run by Cuba’s military, does not benefit from any increase in U.S.-Cuba engagement. To implement this portion of the directive, the State Department has been directed to list entities with which transactions will be prohibited, and it is unclear how many entities the State Department will list. GAESA is estimated to control up to 60 percent of the Cuban economy. However, according to the FAQs issued by OFAC, deals that are in place prior to the issuance of new regulations implementing the directive will be permitted.