How our remittances to Cuba are legal
The United States of America placed the Republic of Cuba under a broad embargo during a series of events that transpired after the Cuban Communist Party ascended to power in Cuba in 1959. This has remained for the past 60 years as codified in the Cuban Assets Control Regulations and administered by the Office of Foreign Assets Control. Broadly speaking, unless exempt or licensed, all transactions in which any Cuban national is deemed to have an 'interest' in are prohibited. All property of Cuban nationals are generally blocked. [^1]
At the same time, however, did you know that official exceptions and licenses exist that authorize almost 100 types of transactions to/from Cuban nationals?
Part E of the Cuban Assets Control Regulations details these exceptions and licenses. Many of them are aimed at supporting the Cuban people, in areas such as civil society and private enterprise; others are more exciting, such as authorizing Cuban-origin pharmaceuticals to go through the FDA approval process, or humdrum, relating to issues such as insurance for travel, official U.S. government business, foreign embassies in Cuba.
In the areas of remittances, authorized transactions include (but are not limited to) family remittances, donative remittances, emigration remittances, remittances that support private businesses in Cuba, as long as they are not made via a Cuban Restricted Entity. It is also legal for non-prohibited Cuban nationals to send money to the US. Payments to independent entrepreneurs and hiring of Cuban software engineers are also authorized.
We think everyone should know about these exceptions and licenses. What is legal and authorized is much broader than what we believe the general public currently understands. In this article, we focus on the authorized transactions that are made on the Lindo app.
If you wish to conduct an authorized transaction, including one not covered below, we are ready and willing to serve you to the best of our ability.
In the next section, we explain the current sanctions laws on Cuba as they relate to the transactions made on the Lindo – Send Money to Cuba app, available on iOS and Android.
What the rules are
Out of the almost 100 types of authorized transactions, we focus on two Sections of Part E for our app:
1. Section 515.570, authorizing family and donative remittances, along with 4 other types of US to Cuba remittances, excluding the use of any entity on the Cuba Restricted List to complete these remittances
2. Section 515.582, authorizing payments to independent Cuban entrepreneurs who export goods or services on the Section 515.582 List
Family and donative remittances
The full text of Section 515.570 is linked here eCFR :: 31 CFR 515.570 -- Remittances. Helpfully, the Office of Foreign Assets Control provides a more concise version of the authorized remittances in Section 515.570 on their website under FAQ 732, and the relevant parts are quoted as follows: | Office of Foreign Assets Control (treasury.gov).
Family remittances: Persons subject to the jurisdiction of the United States who are 18 years of age or older are authorized to make remittances to nationals of Cuba who are close relatives, as defined in § 515.339, of the remitter, provided that the recipient is not a prohibited official of the Government of Cuba, a prohibited member of the Cuban Communist Party, or a close relative of a prohibited official of the Government of Cuba or prohibited member of the Cuban Communist Party, and provided that the remittances are not made for emigration purposes. See §§ 515.337, 515.338, and 515.339 for relevant definitions.
Donative remittances: Effective June 9, 2022, OFAC amended § 515.570(b) to authorize donative remittances to Cuban nationals who are not prohibited officials of the Government of Cuba, prohibited members of the Cuban Communist Party, or close relatives of a prohibited official of the Government of Cuba or prohibited member of the Cuban Communist Party.
In order to send money as a family remittance or a donation:
First, you have to be 18 years of older.
Second, the sources of your funds cannot be blocked. If you are not a Cuban, you are not blocked. If you are a Cuban national “lawfully present and intending to lawfully remain in the United States on a permanent basis” and fulfill the other requirements of 515.505 https://www.ecfr.gov/current/title-31/part-515/section-515.505#p-515.505(d), you are not blocked.
Third, you are sending the funds to someone who is a close relative, or to anyone who is a Cuban national (donation), as long as that person is not a prohibited individual.
The full text of the definition of a close relative in Section 515.339 is as follows:
For purposes of this part, the term close relative used with respect to any person means any individual related to that person by blood, marriage, or adoption who is no more than three generations removed from that person or from a common ancestor with that person.
To understand more clearly if someone in your family tree is a ‘close relative’, check out our forthcoming article on close family members, where we explain specific examples given by OFAC in the CACR.
Prohibited persons
Prohibited persons include prohibited members of the Cuban Communist Party, officials of the Government of Cuba, and the close relatives of these individuals.
Section 515.338 prohibited members of the Cuban Communist Party means members of the Politburo.
Section 515.337:
"For purposes of this part, the term prohibited officials of the Government of Cuba means Ministers and Vice-Ministers; members of the Council of State and the Council of Ministers; members and employees of the National Assembly of People's Power; members of any provincial assembly; local sector chiefs of the Committees for the Defense of the Revolution; Director Generals and sub-Director Generals and higher of all Cuban ministries and state agencies; employees of the Ministry of the Interior (MININT); employees of the Ministry of Defense (MINFAR); secretaries and first secretaries of the Confederation of Labor of Cuba (CTC) and its component unions; chief editors, editors, and deputy editors of Cuban state-run media organizations and programs, including newspapers, television, and radio; and members and employees of the Supreme Court (Tribuno Supremo Nacional)."
These individuals are not currently on the list of Specially Designated Individuals, a list published by OFAC, that is included in most automated sanctions-screeners. Care must be taken by someone sending money to Cuba to make sure that his recipient, nor any close relative of his, is not on this list.
It is difficult for money transmitters to independently verify, prima facie, that the recipients, nor any close relatives of a recipient, are (a) not prohibited individuals, and (b) who they really say they are e.g., someone’s mother’s first cousin, and so on.
In fact, it is almost logistically impossible, given that one has to produce the list of all of one’s close relatives (within 3 generations older and younger) to the money transmitter and then have the money transmitter verify that none of them are prohibited individuals.
This is why we think that OFAC says, for the purposes of compliance, in FAQ 1057, money transmitters are not required to “independently verify” that the remittances are authorized. To wit, “Banking institutions may rely on the statements of their customers that remittance transactions are authorized unless they know or have reason to know a transaction is not authorized.” In other words, OFAC can accept that the sender takes responsibility for verifying that his transaction is authorized before proceeding with it at a licensed money transmitter, and attests to that at the point of transaction.
Payments to independent entrepreneurs
The full text of Section 515.582 is very concise and can be quoted in full as follows:
Persons subject to U.S. jurisdiction are authorized to engage in all transactions, including payments, necessary to import certain goods and services produced by independent Cuban entrepreneurs as determined by the State Department as set forth on the State Department's Section 515.582 List, located at https://www.state.gov/the-state-departments-section-515-582-list/.
The State Department's Section 515.582 List, as of the time of writing of this article, demonstrates that except for specific categories of goods on the List, all goods and services that are produced by independent Cuban entrepreneurs are authorized to be imported and therefore paid for by U.S. persons.
Those who are engaging in such import transactions must procure evidence that the Cuban exporter is indeed an independent Cuban entrepreneur. According to the List, this could be:
- for individuals, a copy of a self-employment license issued by the Cuban government or,
- for entities, other documentation that shows the entity is “not owned or controlled” by the Cuban government
While this part of the law does not explicitly define the definition an "independent entrepreneur", a helpful reference can be found in Section 515.340, which states the definition of a self-employed individual.
What we do to ensure compliance with sanctions
Transactions done via Lindo fall under the two general license categories detailed above: remittances to family or donations under Section 515.570 of the CACR, or payments to independent entrepreneurs under Section 515.582 of the CACR.
Record-keeping
As a licensed money transmitter licensed by the state of Florida and registered with FinCEN, we are obliged under the Bank Secrecy Act (31 CFR 1010.410(e)) to verify the identity of the person making the transaction, obtain their social security number (or corresponding appropriate data such as passport number) for transactions more than $3,000. Our obligations under Florida regulations (69V-560.703) consist of creating and maintaining records for every money transmission less than $3,000, including details such as name of the sender, confirmation number or receipt, date, amount in US dollars and more.
Our obligations for recording keeping under OFAC regulations are outlined in Section 515.572(b) and 515.601. For a transaction of any amount that falls under the general licenses 515.570 and 515.582, we are required not to know just the name of the sender, but also the address of the sender and of the recipient (515.572(b)(2)). Furthermore, as affirmed in FAQ 1090, these general licenses are self-executing and do not require further OFAC action or authorization [^2]. We can go ahead with the transaction, without waiting for specific approval from OFAC. In place of applying transaction-by-transaction to OFAC for each transaction, we must create a “full and accurate” (515.601) record of every transaction, including a “certification” from each customer (515.572(b)(1)), stating the section that authorizes them to send money to Cuba, the names and addresses of the customer and his recipients, amount of transaction (515.572(b)(2)). We must retain these records for 5 years and make them available to OFAC if it requests them.
Know-Your-Customer
First, in order to create a “full and accurate” record, in line with our Anti-Money Laundering policy, we have taken a conservative approach to understanding each of our guests and their recipients. For any amount that is sent via our application, we require the front and back of the drivers license of the sender, a liveness check via the app, as well as full information about the recipient in Cuba. We require the recipient to provide a photo of the MLC or CUP card to ensure the money is going to the named beneficiary, and a front and back of the Cuban carnet de identidad of the recipient in most cases. All this information provided helps us to understand our guests and their loved ones & family (as well as their Spanish teachers, taxi drivers, scooter vendors, casa particular hosts, etc.). [^3]
Although we are not required to independently verify that remittances are authorized, we use this information to verify the declarations that the user has provided (e.g., biodata), prevent fraud and money laundering, conduct checks against the Specially Designated Nationals list and our internal proprietary database of prohibited individuals (from the prohibited list of 515.337 and 515.338). Understanding family, donative, and independent entrepreneur (i.e., vendor) relationships on a macro-level in our user base helps us to form a better model of U.S.-Cuban and intra-Cuban relationships that will assist in improving our compliance efforts in the long-term.
Attestations
Second, we implement self-attestations in the Lindo app that are consistent with what the general licenses of 515.570 and 515.582 require. Every user is required to choose the license or category (family, donation, or independent entrepreneur) for their remittance, and if a family remittance, to state the nature of the relationship. Even if none of this is required by law, it helps us to have a fuller understanding of each user and to make sure the user is carefully complying with regulations as our in-house compliance team reviews the information provided.
At the end of the recipient input process, and right before submitting his order, the user is asked to attest that they are aware that this transaction is subject to U.S. sanctions regulations and that the information is accurate and complete to the best of their knowledge.
Our independent fulfillment network
Lastly, at Lindo, every single one of our remittances are completed via private, self-employed entrepreneurs who fulfill the remittances independently of state-owned or state-affiliated enterprises. We have verified the identities of our remittance providers, who are not entities on the Cuban Restricted List, but self-employed entrepreneurs.
We are always looking to improve our system, and we know that we always have room for improvement, so if you have any suggestions, please don’t hesitate to reach out at compliance@trylindo.com.
Furthermore, as we have stated above, if you wish to conduct an authorized transaction not covered by the three categories above, please write to us as well – we will take a look and are ready and willing to serve you to the best of our ability.
Our vision for the future
At the end of every customer service interaction, we end with a statement, translated into English as “Thank you for your trust in sending money with Lindo – always the best prices and service, quick delivery, in an easy to use, secure, and convenient application!”
You - our current or future users- are why we exist. We plan to keep improving our app and service so that you will be “110% satisfied or more” (another of our Lindo customer service lingo). It is our honor and pleasure to serve you and your family, your loved ones, and your vendors (more Lindo lingo).
Where will we take you? Our goal is to be the trusted name for all authorized transactions between Cuba and the world. To achieve this, we plan to continue to make this easier and friction-free for you, while creating and maintaining the best compliance program on earth for authorized transactions to Cuba. It takes a great team to understand these regulations, and then build the best products and services that leverage this understanding. For the Lindo app, we have
- tapped experts in sanctions compliance in general and specific licenses under the Cuban Assets Control Regulations,
- built on-the-ground relationships with independent fulfillment staff, and
- as a money service business, put it all together into one app to receive payments and transmit remittances on behalf of our users to their beneficiaries in Cuba.
The work has just begun. We have lots to improve, and we won’t stop until our users are “110% satisfied and more”, and until we reach our goal.
By the way, we are not stopping in Cuba. The purpose of our company is to build the infrastructure that would allow these authorized and compliant transactions to be made easily, for every person, organization, company, and bank on the planet. We have been honored to know many of you, and we are honored that you would trust us with your information and your hard-earned money. We hope you will be with us for a very long time.
Conclusion
We hope you’ve enjoyed learning about the intricacies of sanctions regulations in Cuba with us.
If you are interested in joining our team, write to us at careers@trylindo.com.
If you are interested in partnering with us, please write to partners@trylindo.com.
If you'd like to comment on anything, have questions, feedback or hatemail, or suggestions for improving our compliance process, they will be well-received at help@trylindo.com.
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Next up: Watch out for our forthcoming article on ‘close family’ in Cuba, complete with family tree diagrams.
About us
We build Sanctions Empowerment infrastructure, deeply understanding sanctions regulations to unlock the value of general and specific OFAC licenses for every organization, every fintech, every bank, every company on the planet. Lindo - Send Money to Cuba is our first product, a mobile app for authorized remittances to Cuba.
Sources
Proprietary legal opinion from our lawyers
Footnotes
1. Section 515.201 of the CACR prohibits transactions involving property in which a Cuban national “has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect.
2. OFAC FAQ 1090 (Sept. 26, 2022), https://ofac.treasury.gov/faqs/1090 (“Generally, OFAC’s general licenses are self-executing. This means that if U.S. persons assess that their transactions fall within the scope of the authorizations in 31 CFR § 515.570 and 31 CFR § 515.572, they may execute such transactions without further assurance from OFAC.”).
3. All customer data is securely handled and never provided to third parties other than the specific information that is required to complete remittances.