International Law Advisory - Cuba - Export of Services

OFAC Publishes an Interpretative Ruling Prohibiting the Use of Computer Reservation Systems Owned or Controlled by US Companies to Facilitate Unlicensed Travel to Cuba

The US Department of Treasury, Office of Foreign Assets Control ("OFAC") has published an interpretative ruling, prohibiting a US owned or controlled foreign Computer Reservation System ("CRS") to provide services that facilitate unlicensed travel to Cuba.  This ruling affirms US policy and the Trading With the Enemy Act jurisdiction that prohiits US companies, including foreign subsidiaries that they own or control, from engaging in business activity with Cuba.  Please click here for the ruling.

In arriving at its decision, OFAC determined that a CRS provides a service and does not just transfer "informational material."  In this ruling, OFAC notes that in addition to communicating travel information, a CRS also provides the ability to transact business (i.e., reserve or purchase a ticket).  OFAC determined that the transactional capabilities provided by a CRS made it a "service" that does not fall within the "informational materials" exemption in the Cuban Assets Control Regulations.1  Therefore, a foreign-incorporated CRS, owned or controlled by a US company, violates the US embargo on Cuba if the CRS makes travel reservations relating to Cuba, even if the reservations are processed in a third country, involve non-US citizen travelers, or do not involve travel between the United States and Cuba.

US companies should keep in mind the distinction between transferring informational material and providing a service, particularly as developing technology provides greater opportunities for consumers to conduct transactions based on information that is available on-line.  As many websites are interactive and offer different ways to transact business with companies, this may become a particularly sensitive issue in the future.

OFAC appears poised to begin a more routine publication of "interpretative rulings" that are based on license applications or requests for advisory opinions.  A new internal numbering system is used for this document, and the OFAC website includes a new webpage for interpretative rulings.  Although an OFAC official indicated that these rulings probably will not be released very often, guidance and rulings will be released to the public more frequently than in the past, particularly if the ruling addresses a commonly asked question.

If you have any questions, please feel free to contact Ed Krauland at 202.429.8083.