Reversing their August 2006 position on the remittance of Cuban convertible pesos, the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) has issued a circular to remittance forwarders authorized to engage in transactions with Cuba, stating that those remittance forwarders may now wire Cuban convertible pesos to individuals in Cuba, who are family members of those individuals originally transferring the funds.

This latest authorization further evidences the easing of restrictions on Cuba since President Obama took office. This trend has not only seen easing on travel restrictions and remittance forwarding, but also a significant decline in the enforcement of the Cuban Assets Control Regulations (“CACR”).

According to some sources, this new regulation will allow for recipients to pocket more money which will in turn create a demand for Cuban pesos in U.S. areas with clusters of Cuban immigrants; for example, Miami, New Jersey, etc.

In 2006, the Cuban government imposed a 10% penalty on the exchange of dollars to Cuban pesos. This move was made in response to a crackdown by the U.S. government on foreign banks engaging in U.S. dollar business with Cuba. As a result of Cuba’s actions, dollar-denominated remittances were made more expensive which led to under the table remittances in Cuban convertible pesos. OFAC responded to this action in August of 2006 by issuing a circular to licensed forwarders specifically limiting remittances to U.S. dollars, Canadian dollars, Swiss francs, British pounds an euros.

As noted above, this latest change by OFAC shows an easing of Cuba sanctions and comes 15 months after the Obama Administration removed limitations on the amounts relatives may send to Cuba. According to one source, consumers will receive funds in Cuban convertible pesos at the exchange rate in existence at the time the transfer transaction is made. The $5,000 restriction per remittance transaction has been raised to $10,000.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.