First Tesla Model Y Vehicle Authorized By Biden-Harris Administration Scheduled For Delivery To A Cuban National. Maryland-Based Company Received First BIS License.

2021 Tesla Model Y Long Range 4-Door Sport Utility Vehicle (SUV) With All Wheel Drive (AWD) With 317 Mile Range And One Tesla Wall Connector Gen 3 (208/240V) 

Landed 2021 Tesla Model Y Cost US$38,850.00 

Transported From Port Everglades, Florida, By Crowley Shipping 

The Tesla Will Reside At A Private Residence In Havana 

On 22 November 2023 at Port Everglades in the State of Florida, a 2021 Tesla Model Y was loaded onto a container vessel operated by Jacksonville, Florida-based Crowley Holdings, Inc. (2022 revenue US$2.2 billion) for its journey to Port Mariel, approximately thirty miles from the City of Havana, Republic of Cuba. 

• Import duty for an electric vehicle to the Republic of Cuba is based upon the value of the landed electric vehicle.  If the purchaser is a Micro, Small, or Medium-size Enterprise (MSME), the duty is 21%.  If the purchaser is an individual, the duty is 42%.

• Import duty for a gasoline-powered vehicle to the Republic of Cuba is based upon difference between the value of the landed vehicle and the resale value of the landed vehicle in the Republic of Cuba marketplace, with the difference multiplied by 32%.  For example, if the gasoline-powered vehicle landed valued of US$20,000.00 and the resale value in the Republic of Cuba marketplace is US$70,000.00, then the purchaser in the Republic of Cuba would pay 32% on the difference of US$50,000.00, which is US$16,000.00.  Thus, the import duty equates in this example to 80% of the vehicle landed value.  The resale value of the landed vehicle is determined by La Aduana General de la Republica de Cuba.   

This purchase represented the first delivery of a vehicle manufactured by Austin, Texas-based Tesla, Inc. (2022 revenue US$81 billion) from the United States to the Republic of Cuba authorized by a license issued to Colombia, Maryland-based Premier Automotive Export, Ltd. (PAE) from the Bureau of Industry and Security (BIS) of the United States Department of Commerce.

The Special Event Invitation: “John Felder, Founder and Chief Executive Officer of Colombia, Maryland-based Premier Automotive Export, Ltd. (PAE) has the honor of inviting you to a documentary premier “Driving Towards Change” that tells the story of my fifteen-year journey to become the first recipient of a license from the United States government to sell electric vehicles to Cuba.  At the event, we will also showcase the first Tesla vehicle delivered to Cuba from the United States.  This two-hour event will be at 2:00 pm on Friday, 1 December 2023, at the 2.45 Bar-Restaurante (Calle 46 & 5ta A La Hababa, Cuba).  International Jazz Artist, Chuck Holden will be performing at the event with a trio of Cuban musicians.”

During the Obama-Biden Administration (2009-2017) and then during the Trump-Pence Administration (2017-2021) PAE was awarded the first two licenses from the BIS to export electric vehicles and electric vehicle charging stations from the United States to the Republic of Cuba.  Exports to the United States Embassy in the city of Havana, Republic of Cuba, were specifically authorized by the second license.  PAE has received five BIS licenses since 2017 including the first BIS license to export an electric vehicle to an embassy located in the Republic of Cuba.   

On 17 November 2022, the Biden-Harris Administration (2021- ) approved a license application submitted on 22 October 2022 by PAE to the BIS to export electric vehicles and chargers to republic of cuba nationals with the “ULTIMATE CONSIGNEE: Privately owned companies in the Republic of Cuba owned by Cuba Nationals.”  The BIS license is valid until 30 November 2026.   

• “1. The items must be used to meet the needs of the Cuban people. 2. The items are not for resale to the Cuban government, or Cuban Government officials. 3. The items may not be reexported from Cuba to any other destination. 4. The items may not be used to enable or facilitate the export of goods or services from Cuba that primarily generate revenue for the Cuban government.”

On 28 September 2022, the BIS issued a license to PAE for the export of electric scooters and electric bicycles to Republic of Cuba nationals and to MSMEs.     

• LINK: Home Delivery For Electric Scooters To Cuba: As Biden-Harris Administration Expands U.S. Export Opportunities, A U.S. Company Responds Quickly To Customer Requests. Next Correspondent Banking? December 04, 2022  

• LINK: Ten Months After Denial, Biden-Harris Administration Approves Exports Of Electric Motorcycles, Electric Scooters To Cuba Nationals And To Privately-Owned Companies In Cuba October 05, 2022 

On 15 December 2021, the BIS denied a license application submitted on 30 September 2021 by PAE to export electric vehicles and chargers to republic of cuba nationals.  From the license application: “Specific End Use- Ordinary Cuban Nationals would be the specific End User and purchasing electric vehicle for their own personal transportation.”      

• From BIS: “There is a general policy of denial for exports and reexports to Cuba of items subject to the EAR, as described in Section 746.2(b) of the EAR. However, there are exceptions to the general policy of denial, some of which are listed below: … Items necessary for the environmental protection of U.S. and international air quality, waters and coastlines, including items related to renewable energy or energy efficiency, are generally approved.”    

• A license exception is a general authorization to export or reexport certain items without a license under stated conditions.  Only the license exceptions, or portions thereof, listed Section 746.2(a)(1) of the EAR are available for Cuba…. Support for the Cuban People: License Exception Support for the Cuban People (SCP) “§ 740.21 Support for the Cuban People (SCP). (a) Introduction. This License Exception authorizes certain exports and reexports to Cuba that are intended to support the Cuban people by improving their living conditions and supporting independent economic activity; strengthening civil society in Cuba; and improving the free flow of information to, from, and among the Cuban people. (b) Improving living conditions and supporting independent economic activity.…. (1) Items for use by the Cuban private sector for private sector economic activities… (2) Items sold directly to individuals in Cuba for their personal use or their immediate family's personal use,” LINK   

NOTE: On 24 January 2022, John Felder wrote to Brian Nichols, Assistant Secretary of State for Western Hemisphere Affairs, United States Department of State.  Excerpts: “I am writing you today to obtain authorization for my company to donate to the United States Department of State four (4) electric vehicle (EV) chargers for use at the Embassy of the United States in the city of Havana, Republic of Cuba, and for use at the Residence of the United States Ambassador in the city of Havana, Republic of Cuba.  My company would also coordinate the installation if beneficial to expediting the process….  I previously received from the Embassy of the United States in the Republic of Cuba an inquiry about sourcing an electric vehicle.”  There has yet to be a response from the United States Department of State despite several follow-up communications. 

Eleven Months After Denial, Biden-Harris Administration Approves Four-Year License To Export Electric Vehicles To Micro, Small & Medium-Size Enterprises (MSME's) In Cuba 

Original BIS License Application Background 

United States Department of Commerce- Bureau of Industry and Security, Office of Nonproliferation and Treaty Compliance- Foreign Policy Division, Washington DC- 10 November 2021  

“The Department of Commerce intends to deny the application referenced above. We are taking this action pursuant to Section 1756(a)(2) of the Export Control Reform Act of 2018 (ECRA) and in accordance with Part 750.6(a) of the Export Administration Regulations (EAR). The Department of Commerce believes that denial of this application furthers the United States policy in Section 1752(1)(B) of the ECRA, “to restrict the export of items if necessary to further significantly the foreign policy of the United States.”  We have reviewed your license application to export electric vehicles to Empresa Logistica Palco for resale to the general population in Cuba. Interagency reviewers have determined that your proposed transaction would be detrimental to U.S. foreign policy interests due to an unacceptable risk of diversion to unauthorized end uses and/or end users that primarily generate revenue for the state (including uses in the tourism industry).”    

“The attached application is rejected pursuant to Section 1756(a)(2) of the Export Control Reform Act of 2018 (ECRA), as amended, and paragraph 750.6 of the Export Administration Regulations. The U.S. Government has concluded that the export would be detrimental to U.S. foreign policy interests. Please refer to the attached official intent to deny letter dated November 10, 2021 for details regarding this denial. If you wish to rebut the intent to deny, a work item has been sent via SNAP-R that will allow you provide a rebuttal.”    

United States Department of Commerce- Bureau of Industry and Security, Office of Nonproliferation and Treaty Compliance- Foreign Policy Division, Washington DC- 15 December 2021  

“This application [500- Nissan Leaf Electric Vehicle value US$17,500,000.00] is denied pursuant to Section 1756(a)(2) of the Export Control Reform Act of 2018 and Section 750.6 of the Export Administration Regulations. The Department of Commerce, in consultation with other U.S. Government agencies, has concluded that this export would be detrimental to U.S. foreign policy interests. Refer to the formal intent to deny letter for details regarding this denial.”   

Recent Administration Policy Changes Background And Issue With Payments 

The Biden-Harris Administration policies and regulations have, thus far, focused upon providing connective and re-connective opportunities to the re-emerging private sector in the Republic of Cuba.    

The remaining challenge to transition Biden-Harris Administration policies from aspirational to operational is recreating a cost-efficient, timely, transparent, and secure mechanism to move funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States through the authorization of direct correspondent banking.  

On 10 May 2022, the OFAC issued a license authorizing direct investment in and direct financing to a privately-owned company located in the Republic of Cuba owned by a Republic of Cuba national.  Investment funds and dividends, and financing funds and interest/interest/principal payments must currently be transferred through financial institutions located in third countries.  

• Biden-Harris Administration Approves First Equity Investment Since 1960 In A Private Cuban Company May 10, 2022

•  With U.S. Government Authorization For First Direct Equity Investment Into A Private Company In Cuba, Here Is Important Context And Details.  About The Parties; About The Message. May 16, 2022  

The issuance of the licenses in May 2022, September 2022, and November 2022 by the OFAC and BIS will result in two-way transfers that are small in value but consistent.  Privately-owned companies located in the Republic of Cuba sending dividend (profit sharing) payments to the source(s) of direct investment and sending interest and principal payments for direct financing.  Republic of Cuba nationals and privately-owned companies located in the Republic of Cuba sending payment(s) for the purchase of an electric vehicle.  

From John Felder, Founder and Chief Executive Officer of PAE, “Essential for the OFAC to authorize direct correspondent banking so payments for electric vehicles may be transferred by citizens of Cuba with the least amount of cost, least amount of effort, least amount of time, most amount of security, and most amount of transparency.  Payments should not need to move through third-country banks.  Support two-way transactions rather than three-way transactions.”

Potential customers of PAE have inquired about installment payments for the purchase of EVs.  As monthly payments would be minimal in value, the cost for sending the funds through a third country financial institution would be larger than the installment amount.  Flexibility to provide installment payments will further enhance the cashflow of an MSME and further connect the MSME with the United States-based company.   

A significant transaction hurdle remains receiving payments in the United States from Republic of Cuba nationals residing in the Republic of Cuba who are restricted in the amount of Cuban Pesos they may exchange for convertible currencies, including United States Dollars and Euros.   

The OFAC authorizes United States financial institutions to have correspondent accounts with Cuba-based financial institutions.   

The decision by the Obama-Biden Administration not to authorize Republic of Cuba-based financial institutions to have correspondent accounts with United States-based financial institutions never made sense- the marketplace, meaning United States-based financial institutions and their customers should determine if they want to engage in direct correspondent banking.  As written, the OFAC regulations today do not provide United States companies with a viable mechanism to avoid the use (and delay and expense) of third-country financial institutions to send or receive authorized payments.  Why one way, but not both ways?    

The use of correspondent accounts is particularly critical to the re-emerging private sectors in Cuba as represented by MSMEs. 

The current requirement to move funds from the Republic of Cuba and to the Republic of Cuba through third-country financial institutions is inefficient, not transparent, and expensive- especially when considering that MSME transactions are often small which makes the fees far more onerous as a percentage of the total transaction.  This is true for vehicles and vehicle parts. 

There are discussions within the BIS, OFAC, and United States Department of State to authorize Republic of Cuba-based financial institutions to have correspondent accounts with United States-based financial institutions which would then permit the efficient, transparent, and cost-effective movement of funds for authorized transactions.   

• Facing Extinction Like Javan Rhino? Non-U.S. Banks Engaging With U.S. And Non-U.S. Entities For Authorized Transactions Involving Cuba Due To Risk Of OFAC Penalties. Since 2015, Only Two U.S. Banks.  October 17, 2022 

• US$4.4 Billion Potential Reasons For U.S. Banks To Ignore Biden Administration Requests To Support Private Sector In Cuba. OFAC Again Swings Mightily Its Sword of Damocles. Nov 7, 2023

PAE BIS License History 

PAE has received five licenses from the BIS for the export of vehicles (gasoline and electric) to the Republic of Cuba, including for use by embassies.  The first BIS license was issued during the Obama-Biden Administration (2009-2017), the second BIS license was issued during the Trump-Pence Administration (2017-2021), and the third, fourth, and fifth BIS licenses were issued during the Biden-Harris Administration (2021- ).    

From the BIS: “There is a general policy of denial for exports and reexports to Cuba of items subject to the EAR, as described in Section 746.2(b) of the EAR. However, there are exceptions to the general policy of denial, some of which are listed below: … Items necessary for the environmental protection of U.S. and international air quality, waters and coastlines, including items related to renewable energy or energy efficiency, are generally approved.”   

• BIS License D1297862 (11/17/22- 11/30/26)- Electric vehicles and chargers to republic of cuba nationals with the “ULTIMATE CONSIGNEE: Privately owned companies in the Republic of Cuba owned by Cuba Nationals.”    

• BIS License D1290656 (9/28/22-9/30/26)- Electric scooters and electric bicycles to individuals of Cuban descent and to Micro, Small and Medium-Size Enterprises (MSMEs) in the Republic of Cuba owned by Republic of Cuba nationals.   

• BIS License D1267261 (1/24/22-1/31/26)- Sales only to embassies.  Automobiles: Gasoline powered, Pickup trucks with ICE, Electric or Hybrid Engines. Options to include 4x4, 2 or 4 door cab.  

• BIS License D1166163 (7/3/19-7/31/23)- Sales only to embassies.  Forty-one (41) different parts for gasoline powered vehicles.  

• BIS License D1076571 (1/9/17-1/31/21)- To export Nissan Leaf electric vehicle and Clipper Creek level II 40-amp electric charger with J-1772 universal charging connector to embassy of Guyana in Havana, Republic of Cuba.   

• BIS License Exception (2017/2018)- Four (4) electric scooters.  A license exception is a general authorization to export or reexport certain items without a license under stated conditions.  Only the license exceptions, or portions thereof, listed Section 746.2(a)(1) of the EAR are available for Cuba…. Support for the Cuban People: License Exception Support for the Cuban People (SCP) “§ 740.21 Support for the Cuban People (SCP). (a) Introduction. This License Exception authorizes certain exports and reexports to Cuba that are intended to support the Cuban people by improving their living conditions and supporting independent economic activity; strengthening civil society in Cuba; and improving the free flow of information to, from, and among the Cuban people. (b) Improving living conditions and supporting independent economic activity.…. (1) Items for use by the Cuban private sector for private sector economic activities… (2) Items sold directly to individuals in Cuba for their personal use or their immediate family's personal use,”   

PAE-Related Analyses Links 

Biden-Harris Administration Re-Engagement With Cuba’s Re-Emerging Private Sector Brings Urgency To Re-Authorization Of Direct Correspondent Banking, U-Turn Transactions. One-Way Does Not Work.  October 06, 2022 

Ten Months After Denial, Biden-Harris Administration Approves Exports Of Electric Motorcycles, Electric Scooters To Cuba Nationals And To Privately-Owned Companies In Cuba October 05, 2022 

BIS "Returned Without Action" License Application To Donate EV Chargers To U.S. Embassy In Havana Because "Ultimate Consignee" Cancelled Transaction March 07, 2022  

U.S. Department Of State Appoints "Chief Sustainability Officer"- Mandate Text Includes Focus On "Electrifying Fleet" And "Host Partners" Does This Mean EVs For Cuba? President Biden Supports?  February 10, 2022   

While Promoting EV Use In The United States, Biden-Harris Administration Refuses To Permit Exports Of EVs To Cuba For Use By Re-Emerging Private Sector- And U.S. Embassy In Havana Does Not Want One.  February 08, 2022   

Surprise Decision: Biden-Harris Administration Renews Trump-Pence Administration License To Export EVs To Embassies In Cuba. Company Offers To Donate EV Chargers To U.S. Embassy/Ambassador Residence  January 25, 2022    

President Biden Rejects BIS License Application To Export Electric Vehicles/Chargers To Cuba's Self-Employed, MSME's. Reversal Of "General Policy Of Approval." President Trump Authorized EV Exports.  December 20, 2021    

Beginning Today Residents Of Cuba May Purchase And Install Residential Solar Systems. Cost 55,000.00 Pesos (US$2,300.00). Call 7833-3333.  November 04, 2021    

Cuba Has Nickel And Cobalt. Vehicle Electric Batteries Use Nickel And Cobalt. Cuba Should Benefit.  September 25, 2021     

Cuba Owes Partner Canada's Sherritt International Corporation Tens Of Millions Of US Dollars. But, Both Cuba & Patient Company (And Shareholders) Anticipate Profitable Role With Electric Vehicles.  July 03, 2021   

Restriction On Sale Of Premium Gasoline May Benefit Electric Vehicles & Solar Panels; Embassies Concerned.  April 07, 2017    

Florida Company Receives License To Export Electric Vehicles To Cuba; Charging Stations From New Jersey-Based Company.  January 25, 2017 

Florida Company Receives License To Export Electric Vehicles To Cuba; Charging Stations From New Jersey-Based Company January 25, 2017

LINKS TO RELATED ANALYSES 

Is EV Data Really SCI? If U.S. Department Of State Wants U.S. Companies To Shift From Incredulousness To Embracing, Then Be Practical And Transparent Rather Than Secretive And Woefully Unprepared May 29, 2023 

State Department, NSC, OFAC, BIS, USDA Don't Understand Requirements For Financial Plumbing To Function Efficiently.  They Excel In Creating, Maintaining, And Defending Clogs. May 16, 2023  

Biden-Harris Administration Issues Third Known BIS/OFAC License Authorizing Vehicle Exports From U.S. To Cuba. Payments Still Must Move Through Third Countries. May 12, 2023  

Cuba Reports Creation Of 294 New MSMEs. 3.7% Are Government-Operated Companies Becoming "Private" Companies. May 10, 2023  

Why Is One-Year Anniversary Of Biden-Harris Administration Approving First Investment/Financing To Private Company In Cuba A Disappointment? Cuba Has Not Published Regulations For Delivering It. May 9, 2023  

Why Do U.S.-Based Financial Institutions Avoid Cuba? OFAC Uses 54 Pages To Describe "De-Risking" Reasons. Irony? They Lament The Impact Of Their Decisions. Then Why Create Them? May 7, 2023  

Logic From U.S. Department Of State:  If We Permit It, Cuba Might Not Use It, So We Won’t Permit It.  And, Yes, No One Asked Cuba. And, No One Asked U.S. Banks, Companies. May 1, 2023  

Biden-Harris Administration Approves Second Known License For A U.S. Company To Export Vehicles And Equipment To Private Companies In Cuba. Payment? That Remains A Problem. OFAC Doesn't Care. Apr 29, 2023  

Cuba "Streamlining" Approval Process For Agriculturally-Focused Economic Associations With Foreign Capital. Still No Regulations For U.S.-Sourced MSME Private-Sector Foreign Investment/Financing Apr 27, 2023  

Cuba Seeking Investors, Financing For State-Owned Companies.  U.S. Entrepreneurs Waiting Since May 2022 For Cuba Regulations To Deliver Investment And Financing To Private Companies In Cuba Apr 27, 2023

LINK TO COMPLETE ANALYSIS IN PDF FORMAT

OFAC Fines Binance US$968.6 Million For Transactions In Five Countries, Including Cuba. Maximum Penalty Was US$592.1 Billion- More Than Combined Wealth Of Musk, Bezos, Ellison, And Some From Buffet.

OFAC Fines Binance US$968.6 Million For Transactions In Five Countries, Including Cuba.  Maximum Penalty Was US$592.1 Billion Which Is More Than The Combined Wealth Of Musk, Bezos, Ellison. 

The Maximum Penalty Would Require Combined Wealth Of Elon Musk (US$251 Billion); Jeff Bezos (US$161 Billion); Larry Ellison (US$158 Billion); And Some From Warren Buffet (US$121 Billion). 

OFAC Accepted Approximately 1/600th Of The Maximum Penalty. Comparable To Reducing A Maximum Driving While Intoxicated (DWI) Fine From US$1,000.00 To Approximately US$1.50.

And OFAC Reserves The Right To Seek Maximum Penalty If Company Violated Settlement Agreement.

“OFAC Settles with Binance Holdings, Ltd. for $968,618,825.00 Related to Apparent Violations of Multiple Sanctions Programs” (11/21/23) 

Excerpts: 

“Binance Holdings, Ltd. (“Binance”), a Cayman Islands virtual currency exchange with affiliates around the world, has agreed to pay $968,618,825.00 to settle its potential civil liability for 1,667,153 apparent violations of multiple sanctions programs administered by the Office of Foreign Assets Control (OFAC).” 

“The maximum statutory penalty amount in this case is $592,133,829,398.00. OFAC determined that the Apparent Violations were not voluntarily self-disclosed and egregious. Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A (the “Enforcement Guidelines”), the base penalty for the Apparent Violations equals the statutory maximum. The settlement amount of $968,618,825.00 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines and Binance’s agreement to retain a Monitor for a five-year term, pursuant to the provisions set forth in OFAC’s Settlement Agreement, a copy of which can be found here.” 

“As a result of the conduct described above, between approximately August 2017 and October 2022, Binance processed 1,667,153 virtual currency transactions — totaling approximately $706,068,127.00 — in violation of § 560.204 of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR); § 542.207 of the Syrian Sanctions Regulations, 31 C.F.R. part 542; § 3(a) and § 7(a) of Executive Order (“E.O.”) 13722 of March 15, 2016, § 510.206 and § 510.212 of the North Korea Sanctions Regulations, 31 C.F.R. part 510; § 1(a)(iii) and § 3(a) of E.O. 13685 of December 19, 2014 (E.O. 13685), § 589.207 and § 589.213 of the Ukraine-/Russia-Related Sanctions Regulations, 31. C.F.R. part 589; § 515.201 of the Cuban Assets Control Regulations, 31 C.F.R. part 515; § 1(a)(iii) and § 4(a) of E.O. 14065 of February 21, 2022; and Section 206(a) of the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq.” 

“Cuba: Respondent matched and executed 9,315 trades, totaling $1,535,225.00, in virtual currency and futures products between U.S. persons and persons located in Cuba, in apparent violation of the prohibition on the transfer of prope1ty or property interests subject to U.S. jurisdiction in which Cuban nationals have an interest, § 515.201 of the Cuban Assets Control Regulations, 31 C.F.R. part 515;” 

LINK To OFAC Enforcement Release

LINK To Settlement Agreement 

LINK To Complete Analysis In PDF Format

Link To Related Analysis 

US$4.4 Billion Potential Reasons For U.S. Banks To Ignore Biden Administration Requests To Support Private Sector In Cuba. OFAC Again Swings Mightily Its Sword of Damocles. Nov 7, 2023

Cruise Lines Respond To Plaintiff In Libertad Act Title III Lawsuit Before Court Of Appeals. New Word: "usufruct" And Definition Of "necessary" And Significance Of 26 Times.

HAVANA DOCKS CORPORATION VS. CARNIVAL CORPORATION D/B/A/ CARNIVAL CRUISE LINES [Consolidated to 1:19-cv-23591; 1:19-cv-21724; Southern Florida District; 23-10171, 11th Circuit Court of Appeals]

Colson Hicks Eidson, P.A. (plaintiff)
Margol & Margol, P.A. (plaintiff)
Jones Walker (defendant)
Boies Schiller Flexner LLP (defendant)
Akerman (defendant)  

HAVANA DOCKS CORPORATION V. MSC CRUISES SA CO, AND MSC CRUISES (USA) INC. [Consolidated to 1:19-cv-23591; 1:19-cv-23588; Southern Florida District]; Judgement Entered 12/30/22; 23-10171, 11th Circuit Court of Appeals]. 

Colson Hicks Eidson, P.A. (plaintiff)
Margol & Margol, P.A. (plaintiff)
Venable (defendant)

HAVANA DOCKS CORPORATION V. NORWEGIAN CRUISE LINE HOLDINGS, LTD. [Consolidated to 1:19-cv-23591; 1:19-cv-23588; Southern Florida District]; Judgement Entered 12/30/22; 23-10171, 11th Circuit Court of Appeals]. 

Colson Hicks Eidson, P.A. (plaintiff)
Margol & Margol, P.A. (plaintiff)
Hogan Lovells US LLP (defendant)

HAVANA DOCKS CORPORATION VS. ROYAL CARIBBEAN CRUISES, LTD. [Consolidated to 1:19-cv-23591; 1:19-cv-23588; Southern Florida District]; Judgement Entered 12/30/22; 23-10171, 11th Circuit Court of Appeals]. 

Colson Hicks Eidson, P.A. (plaintiff)
Margol & Margol, P.A. (plaintiff)
Holland & Knight (defendant) 

LINKS:

Reply Brief Of Defendant-Appellant Carnival Corporation (11/20/23)

Joint Motion For Leave To Increase The Word Limit For The Reply Brief Of Defendants-Appellants Norwegian Cruise Line Holdings, Ltd, Royal Caribbean Cruises, Ltd, MSC Cruises S.A. Co., MSC Cruises (USA), Inc., And MSC Cruises, S.A (11/13/23)

Brief Of Daniel W. Fisk As Amicus Curiae In Support Of Appellee And Affirmance (10/6/23)

Libertad Act Title 3 Lawsuit Filing Statistics 

10/10/2023- Received paper copies of EAppendix filed by Appellee Havana Docks Corporation in 23-10151, Appellee-Cross Appellant Havana Docks Corporation in 23-10171. 10 VOLUMES - 2 COPIES [23-10151, 23-10171] [Entered: 10/11/2023 11:15 AM]

10/10/2023- Received 4 paper copies of EBrief, filed by DANIEL W. FISK AS AMICUS CURIAE IN SUPPORT OF APPELLEE AND AFFIRMANCE in 23-10151, 23-10171. [23-10151, 23-10171] [Entered: 10/12/2023 04:09 PM]

11/13/2023- TIME SENSITIVE MOTION for excess words/pages filed by RCL. Motion is Opposed. [120] [23-10171] (ECF: Paul Clement) [Entered: 11/13/2023 10:05 AM]

11/20/2023- Reply Brief filed by Appellant-Cross Appellee CCL. [23-10171] (ECF: Kannon Shanmugam) [Entered: 11/20/2023 11:44 AM] 

Excerpts From Reply Brief Of Defendant-Appellant Carnival Corporation 

Pursuant to Federal Rule of Appellate Procedure 28(i) and 11th Circuit Rule 28-1(f), Carnival Corporation adopts and joins in full the arguments made by Royal Caribbean Cruises, Ltd.; MSC Cruises S.A.; MSC Cruises S.A. Co.; MSC Cruises (USA), Inc.; and Norwegian Cruise Line Holdings, Ltd., includ[1]ing their arguments that (1) the cruise lines did not traffic in “property” that was “confiscated”; (2) the cruise lines’ activities were “incident” and “neces[1]sary” to “lawful travel”; (3) Havana Docks is not a “United States national”; (4) the cruise lines did not “knowingly” and “intentionally” traffic in confis[1]cated property; (5) the damages award violates the one-satisfaction rule and the Due Process Clause of the Fifth Amendment to the United States Consti[1]tution; and (6) the district court erred by trebling the interest it awarded. 

Havana Docks also argues that, even if a court could revisit the non-conclusive aspects of the certified claim, the historical facts prove that it had a right to conduct passenger operations. See Br. 44-46. It contends that, because the concession granted usufruct rights “greater than the rights granted by a simple lease” and the Helms-Burton Act “specifically recognizes that ‘any leasehold interest’ is a protected property interest within the scope of the Act,” “so too are the usufruct rights” in the concession. Havana Docks Br. 45-46. But even if its legal citations concerning usufruct rights under American law were somehow relevant to the question of Cuban law, that merely establishes the undisputed proposition that the usufruct rights granted by the concession constitute a cognizable interest under the Helms-Burton Act. 

Fourth, even if Carnival could be held liable to Havana Docks, the award of approximately $109 million in damages should be vacated and remanded as contrary to the one-satisfaction rule and the Due Process Clause. With respect to the one-satisfaction rule, Havana Docks musters no persuasive reason to permit infinite recoveries under a statute designed to place traffickers in the shoes of the Cuban government. And with respect to the Due Process Clause, neither the age of the relevant precedents nor the need for deterrence justifies the exorbitant award. 

Carnival did exactly what the Executive Branch intended American businesses to do. And the result of Carnival’s cruises was to expose Cubans to Americans, and vice versa. The judgment below should be reversed.1 

There is no dispute that the Helms-Burton Act places a plaintiff with a certified claim in “a privileged position” in some respects. Havana Docks Br. 40. The question is the extent of that privileged position, and Ha[1]vana Docks’ reliance on the limited presumption in favor of holders of certified claims is at odds with the statutory text and the canon of constitutional avoid[1]ance. See 22 U.S.C. § 6083(a)(1). 

In effect, Havana Docks contends that Article III courts must ac[1]cept every stray description of a property interest in a certified claim. See Havana Docks Br. 40-42. But the Helms-Burton Act requires only that a court “accept as conclusive proof of ownership of an interest in property a certifica[1]tion of a claim to ownership of that interest.” 22 U.S.C. § 6083(a)(1). As ex[1]plained in Carnival’s opening brief (at 30-31), that presumption is limited to (1) the existence of an interest and (2) the value of that interest.

In its statement of the facts, Havana Docks cites a handful of financial records indicating that Havana Docks collected a small amount of fees related to passengers during a brief period of time. See Br. 9-10. But Havana Docks never actually argues that those cryptic records prove it had a legal right to conduct passenger operations. Because Havana Docks had no interest in “property” that allowed it to conduct passenger operations at the terminal, the judgment below should be reversed. 

Even if Havana Docks had the right to conduct passenger operations, that right would have expired in 2004. See Carnival Br. 32-35; Royal Carib[1]bean Br. 35-45. Havana Docks argues that it can recover for conduct that oc[1]curred between 2016 and 2019 because the certified claim has no time limit and the concession is indefinitely tolled. Neither point is correct. 1. The certified claim (which has no time limit) does not replace the concession (which does) for all purposes. 

This Court’s decision in Glen v. Club Méditerranée, S.A., 450 F.3d 1251 (2006), is not to the contrary. See Havana Docks Br. 52. As Carnival explained in its opening brief (at 35), the Court did not hold that a plaintiff acquires a limitless interest in property when its limited interest is confiscated. 

And Havana Docks argues that Carnival’s use of the ter[1]minal was not “necessary” to any lawful travel because it was not strictly nec[1]essary. See Br. 88-91. All of those arguments are unavailing. 

Section 102(h) of the Helms-Burton Act provides that “[t]he eco[1]nomic embargo of Cuba, as in effect on March 1, 1996, including all restrictions under [the Cuban Assets Control Regulations], shall be in effect upon the en[1]actment of this Act, and shall remain in effect, subject to section 6064 of this Act.” 22 U.S.C. § 6032(h). Havana Docks argues that the foregoing provision is a “one-way ratchet” that allowed the Executive Branch to tighten, but not loosen, the regulations as they existed in 1996. Br. 61-62, 65-67. The district court correctly rejected that argument. See Doc. 477, at 118. 

Section 102(h) merely clarifies that the Helms-Burton Act does not dis[1]turb the existing regulations. It provides that the regulations are “in effect” on the day of the Helms-Burton Act’s enactment and “shall remain in effect” thereafter. That language simply prevented any inference that the new stat[1]ute had superseded the existing regulations. Accordingly, there is no reason to conclude that Congress “alter[ed] the fundamental details of a regulatory scheme in vague terms” by freezing the existing regulations in place. Whit[1]man v. American Trucking Associations, 531 U.S. 457, 468 (2001). 

Five administrations have modified the relevant regulations without ob[1]jection from the courts or Congress. OFAC has modified its Cuba regulations at least 26 times over the last three decades, see OFAC, Cuba Sanctions (last visited Nov. 20, 2023), including 13 re[1]visions to the travel provision alone, see 31 C.F.R. § 515.560; see also Kucik Br. 6. This Court has recognized that “the regulations have been alternately loos[1]ened and tightened in response to specific circumstances.” Odebrecht Con[1]struction, Inc. v. Secretary, 715 F.3d 1268, 1276 n.1 (2013) (internal quotation marks and citation omitted). And since the passage of the Helms-Burton Act, Congress has acknowledged—without any objection—an amended version of the regulations. See Trade Sanctions Reform and Export Enhancement Act of 2000, Pub. L. No. 106-387, § 910, 114 Stat. 1549A-67, 1549A-71-72. The Court should not abandon 30 years of practice on the theory that Havana Docks has “discover[ed] in a long-extant statute an unheralded power.” Util[1]ity Air Regulatory Group v. EPA, 573 U.S. 302, 324 (2014). 

For similar reasons, it is irrelevant how the Cuban government charac[1]terized Carnival’s activities in Cuba. See Havana Docks Br. 74. All that mat[1]ters is whether the shore excursions actually complied with the terms of OFAC’s general licenses.

Carnival’s use of the terminal was also “necessary to” the conduct of its lawful travel. In ordinary speech and in context, “necessary” means “im[1]portant, helpful, or appropriate.” And even if “necessary” meant “indispensa[1]ble,” docking at the terminal was indispensable for Carnival’s voyages to Ha[1]vana. 

In any event, Carnival’s use of the terminal was strictly necessary because it was impossible for Carnival to dock anywhere else in Havana. See Carnival Br. 45-46. Havana Docks repeats the district court’s reasoning that, if docking somewhere else in Cuba were possible, then docking at the terminal was not “necessary.” See Br. 90-91. But like the district court, Havana Docks has identified nothing in the statute or regulations restricting the category of lawful travel to specific Cuban cities. Nor does Havana Docks address Carni[1]val’s argument that the statute refers to the use of property that is “necessary to the conduct of such travel,” 22 U.S.C. § 6023(13)(B)(iii) (emphasis added), which most naturally refers to the travel that Carnival actually undertook. See Carnival Br. 45-46. If the Helms-Burton Act prohibited the use of confiscated property simply because a defendant could travel somewhere else in Cuba, it is hard to imagine what transaction or use of property would ever be necessary to lawful travel. 

Even if Carnival were liable under the Helms-Burton Act, the damages award would be excessive for two reasons. First, the one-satisfaction rule pre[1]vents multiple recoveries for the same injury, which is what Havana Docks has obtained here. See Carnival Br. 50-54; Royal Caribbean Br. 78-82. Second, the damages award is unconstitutionally excessive under the Due Process Clause. See Carnival Br. 54-55; Royal Caribbean Br. 84-85.

Bacardi Condemns Decisions By Government Of Cuba, And Companies Operating In Cuba, Robustly Uses U.S. Political Process, But Defends Its US$474 Million Business In Russian Federation. Consistency?

Politico Brussels (17 November 2023)- “BOOZE BANDITS: When the West imposed sanctions on Moscow, hundreds of foreign firms pulled out of the Russian market. But, somehow, in a country with a historic predilection for alcohol, the booze keeps flowing. Jim Beam bourbon and Macallan Scotch whisky are still being imported by the team that marketed them in Russia before the war in Ukraine, a POLITICO investigation finds. More from Sergey Panov and Douglas Busvine here.” 

Politico Pro (15 November 2023)- “Yet some changed their mind: Bermuda-based Bacardi, for example, resumed supplies after a pause, and its local business even reported an 8 percent increase in 2022 sales to 32.6 billion rubles (€431 million at the prevailing exchange rate). Profits trebled.  The family-owned company, which has been branded by Ukraine’s anti-corruption watchdog as an international sponsor of Putin’s war, has doubled down by expanding its contract bottling operations in Russia. The first bottles of its Oakheart rum were produced in the Tula region, to the south of Moscow, in October.” 

The Kyiv Independent (10 August 2023): Ukraine designates Bacardi as 'international sponsor of war' 

LINKS To Related Analyses 

Eight Senators, Two Representatives Supporting Trademark Legislation To Benefit Bacardi. But, Does Legislation Help Resolve 5,913 Certified Claims Against Cuba? March 12, 2023 

In Terminal 4 At Madrid-Barajas Airport, "Havana Club" From Cuba Has A Display, Bacardi From Bermuda Has A Display. No "Havana Club" From Bacardi. July 08, 2022 

U.S. Federal Court Rules Bacardi Must Use USPTO Rules For "Havana Club" Trademark Issue. April 08, 2022 

In Belarus, Minsk Airport Duty Free Stores, Bacardi Outselling Havana Club March 24, 2022 

At Vnukovo International Airport In Moscow, Havana Club Rum Has A Presence, But Bacardi Has More Real Estate In The Duty Free Shop. For Cigars, It's All About Cuba's Brands. March 18, 2022 

Despite Russia Relationship With Cuba, Vnukovo Airport Features Havana Club And Bacardi- With Captain Morgan Separating Them December 26, 2022 

With Three Days Remaining In 2021, Bacardi Sues United States Patent And Trademark Office For In 2016 Authorizing The Registration Of "Havana Club" Rum December 29, 2021 

Irony: Bacardi Assets Seized In 1960 By Cuba. Venezuela And Cuba Are Allies. Venezuela Seizes U.S. Company Assets. Bacardi Marketing Venezuela Rum Benefits Venezuela Financially & Politically November 03, 2021

U.S. Agricultural Commodity/Food Product Exports To Cuba Decrease 46.7% In September; Remain Up 7.4% For Year. US$1.5 Million In Used Vehicles Thus Far In 2023.

ECONOMIC EYE ON CUBA©
November 2023

September 2023 Ag/Food Exports To Cuba Decrease 46.7%- 1
51st Of 225 September 2023 U.S. Food/Ag Export Markets- 2
Year-To-Year Exports Increase 7.4%- 2
Cuba Ranked 53rd Of 225 U.S. Ag/Food Export Markets- 2
September 2023 Healthcare Product Exports US$0.00- 2
September 2023 Humanitarian Donations US$4,099,435.00- 3
Obama Administration Initiatives Exports Continue- 3
U.S. Port Export Data- 17

SEPTEMBER 2023 FOOD/AG EXPORTS TO CUBA DECREASE 46.7%- Exports of food products and agricultural commodities from the United States to the Republic of Cuba in September 2023 were US$20,317,573.00 compared to US$38,167,679.00 in September 2022 and US$20,281,503.00 in September 2021. 

September 2023 exports included: Chicken Meat (Frozen), Chicken Leg Quarters (Frozen), Chicken Legs (Frozen), Meat Of Swine (Fresh), Preserved Chicken Meat, Meat Of Swine, Processed (Frozen), Meat Of Swine (Frozen), Pig Fat (Frozen), Preserved Chicken Meat (Paste), Coffee Roasted Decaffeinated, Nursing Nipples, Umbrellas, Freezers, Chain Saws, Gas Powered Grass & Weed Trimmers, Fork Lifts (US$152,710.00), Electric Food Mixers (US$5,474.00), Used Vehicles (US$593,526.00), Bodies for Passenger Automobiles (US$78,000.00), Motorcycles (US$34,000.00), Trailers And Semi-Trailers (US$17,000.00),

January 2023 through September 2023 TSREEA exports were US$252,804,856.00 compared to January 2022 through September 2022 exports of US$235,204,923.00. Total TSREEA exports since first deliveries in December 2001 exceed:US$7,156,531,222.00.

The data contains information on exports from the United States to the Republic of Cuba- products within the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, Cuban Democracy Act (CDA) of 1992, and regulations implemented (1992 to present) for other products by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and Bureau of Industry and Security (BIS) of the United States Department of Commerce.

The TSREEA re-authorized the direct commercial (on a cash basis) export of food products (including branded food products) and agricultural commodities from the United States to the Republic of Cuba, irrespective of purpose. The TSREEA does not include healthcare products, which remain authorized and regulated by the CDA.

The data represents the U.S. Dollar value of product exported from the United States to the Republic of Cuba under the TSREEA and CDA. The data does not include transportation charges, bank charges, or other costs associated with exports; the government of the Republic of Cuba reports unverifiable data that includes transportation charges, bank charges, and other costs.

COMPLETE REPORT IN PDF FORMAT

US$4.4 Billion Potential Reasons For U.S. Banks To Ignore Biden Administration Requests To Support Private Sector In Cuba. OFAC Again Swings Mightily Its Sword of Damocles.

A Week Shy Of One Year [See Below] Since Previous Analysis, The OFAC Again Swings Mightily Its Sword of Damocles.

When The Biden-Harris Administration (2021- ) Questions Why United States-Based Financial Institutions Generally Recoil At Engagement With Specifically-Authorized Republic Of Cuba-Related Transactions, Including Those Specifically Authorized By Law Rather Than Executive Branch Policy And Regulatory Initiatives, This Is A Primary Catalyst:

“The statutory maximum civil monetary penalty applicable in this matter is $4,399,759,685…  Apparent Violations were voluntarily self-disclosed and were non-egregious…. The settlement amount of $206,213 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines.”

Yes, A Potential Fine Of Approximately US$4.4 Billion For Voluntarily-Disclosed Transactions Totaling US$549,134.89 During A Five-Year Period.

What Incentive Does Any United States-Based Financial Institution Have To Support Re-Engagement Transactions For Privately-Owned Companies In The Republic Of Cuba, Individual Entrepreneurs, When An OFAC Penalty Could Bankrupt The Financial Institution?

United States Department of the Treasury
Washington DC
6 November 2023

Enforcement Release

OFAC Settles with daVinci Payments for $206,213 Related to Apparent Violations of Multiple Sanctions Programs

“Swift Prepaid Solutions, Inc. d/b/a daVinci Payments (daVinci), a financial services and payments firm based in Buffalo Grove, Illinois, has agreed to remit $206,213 to settle its potential civil liability for 12,391 apparent violations of OFAC sanctions on Crimea, Iran, Syria, and Cuba. Between November 15, 2017 and July 27, 2022, daVinci, which manages prepaid reward card programs, enabled reward cards to be redeemed from persons apparently resident in sanctioned jurisdictions. The settlement amount reflects OFAC’s determination that daVinci’s conduct was non-egregious and was voluntarily self-disclosed.

Description of the Apparent Violations

DaVinci provides digital or physical payment reward card programs for corporate, non-profit, and government clients through an online platform. These programs allow daVinci’s clients to issue payment cards to select recipients, typically as part of a loyalty, award, or promotional incentive for employees, customers, and other beneficiaries.

DaVinci’s clients funded the card programs themselves through an issuing bank, with daVinci  providing the digital or physical prepaid cards to authorized users. Upon receiving a list of card recipients from its clients, including names and email addresses, daVinci would send an email containing a token to each authorized user, inviting each to redeem the token for a prepaid card.  To redeem the token, users would go to daVinci’s website and provide their names, addresses, and email addresses. Users could not enter an address in a sanctioned jurisdiction and were screened against sanctions lists. Once screened and verified, funds would be released by the issuing bank to the users’ prepaid cards and the cards would be issued by daVinci to the users, who could then use the cards with merchants who accepted cards via third party credit card networks.

Between March 2020 and February 2022, in the course of a compliance review and subsequent investigation, daVinci discovered that on 12,378 occasions it had redeemed prepaid cards for users with Internet Protocol (IP) addresses associated with Iran, Syria, Cuba, and Crimea. After daVinci began preventing access to its platform from IP addresses associated with these sanctioned jurisdictions, the company further discovered it had redeemed prepaid cards for 13 card recipients who had used email addresses with suffixes (sometimes called top-level domains) associated with sanctioned jurisdictions (e.g., Syria is .sy, Iran is .ir) during the redemption process and who were apparently resident therein.

Over the course of the relevant time period, this absence of comprehensive geolocation controls led daVinci to process 12,391 redemptions totaling $549,134.89 for cardholders apparently located in sanctioned jurisdictions, resulting in apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. § 515.201; the Iranian Transactions and Sanctions Regulations, 31 C.F.R. 2§ 560.204; the Ukraine-/Russia-Related Sanctions Regulations, 31 C.F.R. § 589.287; and the Syrian Sanctions Regulations, 31 C.F.R. § 542.207 (the “Apparent Violations”).

Penalty Calculations and General Factors Analysis

The statutory maximum civil monetary penalty applicable in this matter is $4,399,759,685. OFAC determined that the Apparent Violations were voluntarily self-disclosed and were non-egregious. Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines (“Enforcement Guidelines”), 31 C.F.R. part 501, app. A, the base civil monetary penalty applicable in this matter equals the sum of one-half of the transaction value for each Apparent Violation, which is $274,950. The settlement amount of $206,213 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines.

OFAC determined the following to be aggravating factors:  (1) DaVinci failed to exercise due caution or care when it redeemed prepaid digital reward cards or users who appeared to be in sanctioned jurisdictions. DaVinci knew or had reason to know of redeemers’ IP addresses and email address suffixes but did not incorporate this information into its compliance program or controls. OFAC determined the following to be mitigating factors: (1) OFAC has not issued a Finding of Violation or Penalty Notice to daVinci in the five years preceding the earliest date of the transactions giving rise to the Apparent Violations.  (2) DaVinci undertook  a number of significant remedial measures, including by proactively conducting an internally initiated review, implementing IP blocking of access to its platform from sanctioned jurisdictions, conducting real-time screening and blocking of email address suffixes, and instituting independent third-party testing at regular intervals.  (3) DaVinci cooperated with OFAC’s investigation.

Compliance Considerations

This enforcement action underscores the importance of obtaining and using all available information to verify a customer’s identity or residency, including by using location-related data, such as IP address and top-level domains, for sanctions compliance purposes. As appropriate, firms providing services through online platforms should integrate such information into a risk-based sanctions compliance program to prevent the provision of services to persons in sanctioned jurisdictions. This case further demonstrates the potential shortcomings of controls that rely on customer-provided information, rather than a holistic information-gathering system that can mitigate evasion or misrepresentation. The action further highlights the value of conducting proactive, self-initiated reviews to identify compliance gaps, disclose any potential violations to OFAC, and taking steps to remediate deficiencies, including by instituting periodic independent testing to ensure adequate controls.

OFAC Enforcement and Compliance Resources

On May 2, 2019, OFAC published A Framework for OFAC Compliance Commitments

(Framework) in order to provide persons subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States or U.S. persons, or that use goods or services exported from the United States, with OFAC’s perspective on the essential components of a sanctions compliance program. The Framework also outlines how OFAC may incorporate these components into its evaluation of apparent violations and resolution of investigations resulting in

settlements. The Framework includes an appendix that offers a brief analysis of some of the root causes of apparent violations of U.S. economic and trade sanctions programs OFAC has identified during its investigative process. 

Information concerning the civil penalties process can be found in the OFAC regulations governing each sanctions program; the Reporting, Procedures, and Penalties Regulations, 31 C.F.R. part 501; and the Enforcement Guidelines. These references, as well as recent civil penalties and enforcement information, can be found on OFAC’s website at https://ofac.treasury.gov/civil-penalties-and-enforcement-information.  For more information regarding OFAC regulations, please go to: https://ofac.treasury.gov/.”

LINK TO OFAC REGULATIONS- WHAT BANKS CAN DO WITH CUBA

Link To Related Analysis

LINK: Facing Extinction Like Javan Rhino? Non-U.S. Banks Engaging With U.S. And Non-U.S. Entities For Authorized Transactions Involving Cuba Due To Risk Of OFAC Penalties. Since 2015, Only Two U.S. Banks. October 17, 2022

A CFO, “We Have A US$10,000.00 Transaction From The U.S. To Cuba And A US$10,000.00 From Cuba To U.S.  If We Make A Mistake, A Potential US$14.7 Million OFAC Penalty.  Should We Do It?  What, Am I Nuts?”

Number Of Financial Institutions In The United States Processing Cuba-Related Transactions Remains Less Than Inspiring- And Harmful For Those Engaging In Authorized Transactions.  Since 2015, Two Financial Institutions Have Included Cuba 

An increasing number of financial institutions located in third countries are refusing to process transactions which include a sender located in the Republic of Cuba or a recipient located in the Republic of Cuba. 

This posture has metastasized despite the presentation by the sender or recipient of authorizations and opinions from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, Bureau of Industry and Security (BIS) of the United States Department of Commerce, and Office of the Legal Adviser (OLA) at the United States Department of State.  Why?

• The fear of the cost for an unintentional violation of OFAC transaction compliance regulations

• The inclusion by the OFAC in violation settlement agreements with financial institutions and companies of both the value of the agreed upon financial settlement and the statutory maximum civil monetary penalty. 

Why is the value of the agreed upon financial settlement and the statutory maximum civil monetary penalty problematic?  Because the statutory maximum monetary penalties in four most recent Republic of Cuba-connected OFAC violations were 35, 89, 266, and 1,473 times the actual imposed monetary penalty. 

It is those multipliers which serves as a financial Sword of Damocles, a disincentive for an increasing number of financial institutions from willingness to engage with Republic of Cuba-related transactions regardless of assurances from the United States government.  For example:   

• The OFAC fined a United States-based company US$116,048.60 for a violation according to the OFAC “self-disclosed… and constituting a non-egregious case.”  According to the OFAC, the “statutory maximum civil monetary penalty applicable in this matter is US$4,062,841.00.”    

• The OFAC fined a Switzerland-based company US$720,258.00 for a violation “self-disclosed… and constituting a non-egregious case.”  According to the OFAC, the “statutory maximum civil monetary penalty applicable in this matter is US$64,062,841.00.” 

• The OFAC fined a Monaco-based financial institution subsidiary of a France-based financial institution US$401,039.00 for a violation “self-disclosed… and constituting a non-egregious case.”  According to the OFAC, the “statutory maximum civil monetary penalty applicable in this matter is US$106,853,346.00.”

• The OFAC fined a United States-based company “that provides an online virtual currency exchange and hosted wallet services” US$24,280,829.20 for 116,421 apparent violations.  “The statutory maximum civil monetary penalty applicable in this matter is US$35,773,364,108.57.  OFAC determined that the Apparent Violations were not voluntarily self-disclosed and were non-egregious.  Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines (“Enforcement Guidelines”), the base civil monetary penalty amount applicable in this matter equals the applicable schedule amount, which is US$485,616,584.00.  The settlement amount of US$24,280,829.20 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines.”

 What’s The Solution For Non-United States-Based Financial Institutions?

For non-United States-based financial institutions, the Biden-Harris Administration (2021- ) would need to direct the OFAC reinstate what had been authorized prior to 2019 when the Trump-Pence Administration (2017-2021) reversed a 2015 decision of the Obama-Biden Administration (2009-2017). 

“U-turn” transactions were authorized by the OFAC for financial institutions to process United States Dollar transactions relating to the Republic of Cuba provided they originated and terminated outside the United States and neither the originator nor the beneficiary were persons subject to United States jurisdiction.  Thus, along with the absence of direct correspondent banking, there are two layers of impediments to sending, delivering, and settlement of fund transfers. 

What’s The Solution For United States-Based Financial Institutions?

For non-United States-based financial institutions, the OFAC would also need to reinstate U-turn transactions along with authorizing Republic of Cuba government-operated financial institutions to have Correspondent Accounts with United States-based financial institutions.

By United States law and by regulation, the implementation of Direct Correspondent Banking requires transparency by the participating United States-based financial institution and transparency by the non-United States-based financial institution.  Activity must comply with regulations of the Financial Crimes Enforcement Network (FinCEN) of the United States Department of the Treasury and provisions of the 2001 USA Patriot Act.  If the government of the Republic of Cuba accepts Direct Correspondent Banking, a result will be an increased transparency, accountability, and efficiency for financial institution operations within in the Republic of Cuba. 

In 2016, the OFAC authorized United States-based financial institutions to have correspondent accounts with Republic of Cuba government-operated financial institutions.  However, the OFAC did not authorize Republic of Cuba government-operated financial institutions to have correspondent accounts with United States-based financial institutions. 

Officials of the Obama-Biden Administration refused to provide an explanation as to the basis for their decision and to this day officials of the Biden-Harris Administration maintain that same silence. 

The result of their decision required all transactions authorized by United States laws (1992 Cuban Democracy Act (CDA) and 2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA), regulations, and policies to travel to and from third countries.  The consequences have included inefficiency, increased cost, less transparency, and a financial windfall for financial institutions in third countries who receive a fee for every transaction. 

The TSREEA re-authorized the exports of agricultural commodities and food products on a cash-in-advance only basis.  TSREEA exports value since the first transaction in December 2001, exceed US$6.8 billion.  The CDA re-authorized exports of healthcare products (medical equipment, medical instruments, medical supplies, pharmaceuticals) with payment terms and financing authorized.  CDA exports value since 2003 exceeds US$30.5 million.

For perspective, since 1992, the value of these third-country transactions exceeds US$7 billion- not including the value of annual electronically-delivered remittances- which have been estimated to range up to US$1 billion on an annual basis.

U.S. Banks Doing What

In 2015, Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) acquired accounts for the Embassy of the Republic of Cuba in Washington, DC, and the Permanent Mission of the Republic of Cuba to the United Nations in New York after Buffalo, New York-based M&T Bank Corporation (2021 assets approximately US$150 billion) notified the embassy and mission that it would no longer provide services due to challenges with regulatory compliance for many accounts with embassies and missions. 

Stonegate Bank was also approved for a correspondent account at Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 in 1993 and commenced operation in 1994. 

According to the Republic of Cuba, “Its [BICSA] main activity is ‘enterprises’ bank’ carried through its central services and five branches based in the country’s capital, Santiago de Cuba and Villa Clara. It records all transactions in real time providing its customers with card and remote banking services while it is working on developing other methods of electronic banking.  Its institutional clients, national or foreign, receive a complete accounting and documentary service, while national entities also enjoy of significant volumes of credit facilities. Practically all sectors of the economy benefit from all this, such as that of agriculture, the food industry, the basic and light industries, transportation, aviation, fishing, construction, domestic and foreign trade, the iron and steel industry, sugar, informatics, communications and others with not only economic importance but also social, such as health, water supply, education, culture and sports.  Credit policy followed by the Bank is dictated in a collegiate way by its Credit Committee on the basis of a strict analysis and control in loan making.  The Bank counts on correspondents in the five continents, the majority are first class banks, mainly Europeans and Americans.  Equity capital of shareholders (Grupo Nueva Banca with the biggest share and Bancholding), near the USD95 millions with a balance ranging from 550 to 600 millions, make sure the Bank has a strong solvency ratio.”

Without explanation the Obama-Biden Administration did not authorize BICSA under a license from the OFAC to have a correspondent account at Stonegate Bank, so Stonegate Bank routed transactions for approximately eighty (80) customers on a regular basis through Panama City, Panama-based Multibank (2019 assets approximately US$5 billion) which had dealings with the Republic of Cuba.

However, on 16 June 2020, Bogota, Colombia-based Grupo Aval (2021 assets approximately US$110 billion) reported that “On May 25th, Banco de Bogotá, through its subsidiary Leasing Bogotá S.A. Panamá, acquired 96.6% of the ordinary shares of Multi Financial Group [Multibank]. As part of the acquisition process, MFG’s operation in Cuba was closed and as part of the transaction. Grupo Aval complies with OFAC regulations and doesn't have transactional relationships with Cuba.”

In 2017, Conway, Arkansas-based Home BancShares (2021 assets approximately US$18 billion) through its subsidiary Centennial Bank purchased Stonegate Bank.  Stonegate Bank operations were absorbed into Centennial Bank.   In June 2022, Chicago, Illinois-based Chicago, Illinois-based First American Bank (2021 assets approximately US$6 billion) acquired from Centennial Bank an operating account (and Republic of Cuba-focused branch personnel) for the Embassy of the Republic of Cuba in Washington, DC.  If First American Bank seeks a correspondent account with BICSA and if BICSA is authorized by the OFAC to establish a correspondent account with First American Bank, there would be an opportunity for two-way fund transfers for authorized transactions (agricultural commodities, food products, healthcare products (medical equipment, medical instruments, medical supplies, pharmaceuticals, informational materials, travel (visa processing, overflight fees, landing fees, accommodation payments- Airbnb, etc.), remittances, entrepreneurial activities (direct investment to and direct financing for privately-owned companies located in the Republic of Cuba, etc.).   

LINK TO COMPLETE ANALYSIS IN PDF FORMAT

Biden-Harris Administration Statement About Cuba At United Nations General Assembly Vote Should Have Been Accurate Rather Than Suggestively Misleading. Not The First Time.

Biden-Harris Administration Statement About Cuba At United Nations General Assembly Vote Should Have Been Accurate Rather Than Misleading.  Not The First Time- 23 February 2023 Too. 

Link To Cuba United Nations General Assembly Resolution 

Associated Press (2 November 2023): “The vote on the resolution in the 193-member General Assembly tied the record for support for the Caribbean island nation: The vote was 187 in favor, with the United States and Israel opposed, and Ukraine abstaining. Somalia, Venezuela and Moldova didn’t vote.  The “yes” vote was up from 185 last year and 184 in 2021, and it tied the 2019 vote of 187.” 

“2 November 2023 

Ambassador Paul Folmsbee
Senior Advisor for Western Hemisphere Affairs
New York, New York

AS DELIVERED (emphasis added) 

Thank you, Mr. President. And thank you members of the General Assembly.  The United States stands resolutely with the Cuban people. We strongly support their pursuit of a future with respect for human rights and fundamental freedoms. 

Approximately 1,000 political prisoners remain behind bars in Cuba – more than at any point in Cuba’s recent history. Nearly 700 of those detentions owe to the historic July 11, 2021, protests during which members of civil society including human rights defenders, as well as minors of age, exercise their freedom of expression and right of peaceful assembly. We share the Cuban people’s dream of democracy in Cuba and join international partners in calling for the Cuban government to immediately release all those unjustly detained. 

Despite Cuba’s membership in the UN Human Rights Council, the Cuban government has delayed responding to requests to send independent experts to Cuba, who would help advance respect for human rights, including freedom of expression, freedom of religion, or belief, and the freedom to assemble peacefully. Some of these requests have remained pending for 10 years. 

Sanctions are one set of tools in our broader effort toward Cuba to advance democracy and promote respect for human rights and fundamental freedoms in Cuba. We therefore oppose this resolution. 

We recognize the challenges the Cuban people face. That is why U.S. sanctions include exemptions and authorizations relating to the exports of food, medicine, and other humanitarian goods to Cuba.  The United States remains a significant source of humanitarian goods to the Cuban people and one of Cuba’s principal trading partners. In 2002* [*2022] alone, U.S. companies exported over $295 million worth of agricultural goods to Cuba, including food, to help meet the needs of the Cuban people. 

The United States opposes this resolution. We encourage this body to urge the Cuban government to adhere to its human rights obligations and listen to the Cuban people and their aspirations to determine their own future.  Thank you, Mr. President.” 

Clarifications

The Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 re-authorized the direct commercial (on a cash basis) export of food products (including branded food products) and agricultural commodities from the United States to the Republic of Cuba, irrespective of purpose.  

The Cuban Democracy Act (CDA) of 1992 re-authorized the direct commercial (on a cash basis or with payment terms) export of healthcare products (medical equipment, medical instruments, medical supplies, and pharmaceuticals) to the Republic of Cuba. 

The export of agricultural commodities and food products and healthcare products are NOT a component of United States sanctions which the Biden-Harris Administration (2021- ) benevolently conveys upon the 11.3 million residents of the Republic of Cuba.  The TSREEA and CDA are statutes, laws, passed by the United States Congress and signed into law by the president of the United States. 

In 2022, United States-based companies exported US$328,536,988.00 in products using provisions of the TSREEA.  Link To Statistics In PDF Format 

Related Tweets From United States Department Of State 

Misleading Tweet By Biden-Harris Department Of State Emulates Trump-Pence Department Of State.  So Much For Wanting To Be Different.  Channeling Michael Kozak. February 25, 2023 

Two Tweets From US Assistant Secretary Of State Michael Kozak Devoid Of Important Context And Details; He's Done It Before April 11, 2020 

Clarification To Tweet From Michael Kozak, US Assistant Secretary Of State About U.S. Exports To Cuba September 24, 2019 

Export Data 

The TSREEA re-authorized the direct commercial (on a cash basis) export of food products (including branded food products) and agricultural commodities from the United States to the Republic of Cuba, irrespective of purpose. The TSREEA does not include healthcare products, which remain authorized and regulated by the CDA. 

The data represents the U.S. Dollar value of product exported from the United States to the Republic of Cuba under the TSREEA. The data does not include transportation charges, bank charges, or other costs associated with exports; the government of the Republic of Cuba reports unverifiable data that includes transportation charges, bank charges, and other costs.

HEALTHCARE PRODUCT EXPORTS- Exports of healthcare products (medical equipment, medical instruments, medical supplies, pharmaceuticals) to the Republic of Cuba are subject to provisions of the Cuban Democracy Act (CDA) of 1992, which require end use-verification, but are not subject to cash-in-advance payment requirements. Exports have included: Medicaments (penicillin and insulin); Dentifrices (toothpastes); Laboratory regents; Ultrasonic scanning equipment; Artificial limbs; Medical appliances; Surgical appliances (dental); Ophthalmic (eye); Cannulae (tubing) and gelatin capsules.

HUMANITARIAN DONATIONS- Donated items are neither included in TSREEA nor CDA calculations. These items are generally delivered to the Republic of Cuba using air carriers or containers on vessels; do not include personal deliveries (by travelers on flights and through third countries). A substantial quantity and U.S. Dollar value of items categorized as “humanitarian” are transported from the United States to the Republic of Cuba using air carriers; thus, the information is not documented.

 25 February 2023: Tweet By Biden-Harris Department Of State Emulates Trump-Pence Department Of State.  So Much For Wanting To Be Different.  Channeling Michael Kozak.

Tweet Published By The Embassy of the United States, Havana, Republic of Cuba (22 February 2023): “En 2021, Estados Unidos autorizó más de 4.200 millones de dólares en exportaciones humanitarias a Cuba. En 2022, autorizamos 7.600 millones de dólares de exportaciones humanitarias. Estas exportaciones tienen como objetivo ayudar directamente al pueblo cubano.”

English Translation (Google): “In 2021, the United States authorized more than $4.2 billion in humanitarian exports to Cuba. In 2022, we authorize $7.6 billion of humanitarian exports. These exports are intended to directly help the Cuban people.”

Follow-Up Email From The United States Department of State: “The 2022 figure is 7.6 billion dollars, the 2021 figure is 4.2 billion.  These are figures reflect the combined value of all goods authorized for export from the US to Cuba including food, medicine, and everyday goods.  These are not strictly confined to purchases from US companies but include humanitarian donations by individuals and organizations.  The authorized figure does not necessarily reflect actual exports or donations.”

For perspective:

Agricultural Commodity/Food Commercial Exports Delivered To Cuba

2022- US$328,536,988.00

2021- US$304,774,413.00

For the period 2001 through 2022, from when the first agricultural commodity and food products were exported from the United States to the Republic of Cuba under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, the value delivered was US$6,903,726,366.00. 

Healthcare Products Commercial Exports Delivered To Cuba

2022- US$9,226,763.00

2021- US$487,886.00

For the period 2003 through 2022, the value of healthcare products (medical equipment, medical instruments, medical supplies, pharmaceuticals) delivered from the United States to the Republic of Cuba under provisions of the Cuban Democracy Act (CDA) of 1992 was US$36,419,340.00.

Donations Delivered To Cuba

2022- US$30,083,306.00

2021- US$11,074,090.00

For the period 2014 through 2022, the value of humanitarian donations delivered from the United States to the Republic of Cuba was US$68,682,418.00.

Why did not the United States Department of State not include the details, the context, in its initial tweet?  Because the intention was to deliberately mislead to the benefit of the Biden-Harris Administration (2021- ) and to the detriment of the Diaz-Canel-Valdes Mesa Administration (2019- ). 

• The message was designed to embarrass, humiliate the government of the Republic of Cuba.  That objective is perfectly acceptable when using facts to support the goal.  That objective is profoundly objectionable when using the imperator, the credibility of the government of the United States government.

• The misuse of data in this manner permits the government of the Republic of Cuba to justifiably respond- it is accused by the United States Department of State of lying and misusing statistics and here the United States Department of State engages in equally egregious behavior.

This official statement from the United States Embassy in Havana, Republic of Cuba, is a repeat of what previous administrations have done- be reckless with the facts, and present information that they know fully is misleading.  It’s disrespectful.  It's disgraceful.

The Biden-Harris Administration knows that the Bureau of Industry and Security (BIS) of the United States Department of Commerce has since the Bush-Cheney Administration (2001-2009) and during the Obama-Biden Administration (2009-2017), and Trump-Pence Administration (2017-2021) encouraged companies, organizations, and individuals who are exporting products from the United States to the Republic of Cuba- whether commercial (sold) or donated, not be required to seek a BIS license (if one is required) for the precise U.S. Dollar value of a particular shipment. 

Rather, to reduce paperwork, the exporter is encouraged to bundle expectations.  For example, if a company has an order for US$2 million in poultry, then the exporter might seek a license value of US$75 million or more or less so that if there are subsequent orders within the validity of the BIS license (usually three years to four years) additional BIS licenses are not required.  Same is true for donations- if an organization is hopeful to have US$10 million, then include US$100 million or more or less in the BIS license application.

One example of how the data in the Tweet published on 22 February 2023 by the United States Department of State is misleading- the US$7.6 billion value is more than the value of all agricultural commodity, food product, healthcare product, and donations since December 2001.  

Spain-Based Melia Hotels International, Largest Operator In Cuba, Issues Third Quarter Report. "Positive Trending" International, "Shrinking Domestic" Markets

Meliá Hotels International Results- Meliá closed a positive 3rd quarter, with an increase of +16.1% in revenue (€1,478.3M) and +71.6% in net profit (€108.6M) in the year to September.

Cuba saw a positive evolution in international tourism, as opposed to a shrinking domestic market, with rates suffering the negative impact of the devaluation of the Cuban peso. There was a slight increase in flight operations and an improvement in the nationality mix, led by the Tour Operation segment. In the months to come, foreign markets are expected to continue growing and occupancy levels are set to improve. 

In Cuba, evolution was as expected. On the one hand, international tourism maintained a positive trend, whereas the domestic maket is still showing a contraction. This trends, together with the devaluation of the Cuban peso, has implied significant drops in average rates. The positive note is given by the slight increase in air operations, where increased connectivity allowed for a positive mix of foreign markets. At the segment level, our tour operator partners continue to be the leaders in the destination, followed by our direct clients.

Third Quarter Media Release in PDF

Third Quarter Results Statement in PDF

Third Quarter Data Release in Excel

Cuba Loses Trifecta In U.S. House Of Representatives With New Staff Appointment

Cuba Loses Trifecta In U.S. House Of Representatives

Punchbowl
Washington DC
2 November 2023

“Some news on the staffing front: Johnson is bringing back Josh Hodges as his national security adviser. Hodges worked for Johnson in 2017-18 before decamping for the Trump administration. Hodges worked at the Energy Department, USAID and served two stints on the National Security Council, where he eventually became the senior director for Western Hemisphere affairs.”

From LinkedIn (Josh Hodges)

”Special Assistant to the President and Senior Director for Western Hemisphere Affairs- National Security Council, The White House.  Oct 2020 - Feb 2021

Acting Assistant Administrator/SDAA, USAID, Latin America and the Caribbean.  May 2020 - Oct 2020

Director of Western Hemisphere Affairs Director of Western Hemisphere Affairs.  Jan 2020 - May 2020

Deputy Senior Director for Information Statecraft & Director of Strategic Communications.  Nov 2018 - Jun 2020  

Returning to the National Security Council (NSC) after serving there from 2018 until the Spring of 2020, served as senior advisor and special assistant to the President of the United States and the senior director for the Western Hemisphere at the NSC. A commissioned officer of the White House, supporting, the National Security Advisor, and the Deputy National Security Advisor on wide-ranging issues related to the Western Hemisphere. Attend Deputies Committees and Principals Committees (PC), and chair senior U.S. interagency working group meetings on select security issues and challenges. Returning to the National Security Council (NSC) after serving there from 2018 until the Spring of 2020, served as senior advisor and special assistant to the President of the United States and the senior director for the Western Hemisphere at the NSC. A commissioned officer of the White House, supporting, the National Security Advisor, and the Deputy National Security Advisor on wide-ranging issues related to the Western Hemisphere. Attend Deputies Committees and Principals Committees (PC), and chair senior U.S. interagency working group meetings on select security issues and challenges.

Served as Acting Assistant Administrator (Senior Official Performing the Duties of) and Senior Deputy Assistant Administrator in USAID’s Bureau for Latin America and the Caribbean (LAC), advancing the U.S. national security priorities and coordinating with international partners.

Oversee USAID programs and activities to help to make the U.S. and the Western Hemisphere more peaceful, secure, and prosperous by strengthening the capacity of governments and private entities to improve governance and democracy, combat crime, and create an economic environment in which the private sector can flourish and create jobs.

Throughout the region, USAID has 13 field offices, 4 regional programs, and Washington-based programs focusing on Cuba, Ecuador, and Venezuela. Our programs in LAC help to generate economic prosperity, reduce crime and violence, support civil society, defend universal rights, and protect the environment while fostering business growth. USAID works closely with host governments (national and municipal), other U.S. Government agencies, civil society, the private sector, development banks, and international organizations to help achieve enduring results.Served as Acting Assistant Administrator (Senior Official Performing the Duties of) and Senior Deputy Assistant Administrator in USAID’s Bureau for Latin America and the Caribbean (LAC), advancing the U.S. national security priorities and coordinating with international partners. Oversee USAID programs and activities to help to make the U.S. and the Western Hemisphere more peaceful, secure, and prosperous by strengthening the capacity of governments and private entities to improve governance and democracy, combat crime, and create an economic environment in which the private sector can flourish and create jobs. Throughout the region, USAID has 13 field offices, 4 regional programs, and Washington-based programs focusing on Cuba, Ecuador, and Venezuela. Our programs in LAC help to generate economic prosperity, reduce crime and violence, support civil society, defend universal rights, and protect the environment while fostering business growth. USAID works closely with host governments (national and municipal), other U.S. Government agencies, civil society, the private sector, development banks, and international organizations to help achieve enduring results.”

Mario Diaz-Balart (R- 26th District)
United States House of Representatives
Committee on Appropriations
Chairman- Subcommittee on State, Foreign Operations, and Related Programs

María Elvira Salazar (R- 27th District)
United States House of Representatives
Committee on Foreign Affairs
Chairwoman- Subcommittee on the Western Hemisphere, Civilian Security, Migration and International Economic Policy