The term "United States" includes the territories and possessions of the United States and the customs waters of the United States (as defined in section 401 of the Tariff Act of 1930 (19 U.S.C. 1401)). i.e. Guam, Puerto Rico or any other area under the jurisdiction or authority of the United States, including the Trust Territory of the Pacific Islands.
Office of Foreign Assets Control
The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions against targeted countries. OFAC is empowered to impose controls on transactions and freeze foreign assets under US jurisdiction. Several of the sanctions are based on United Nations Security Council Resolution, whilst others are unilaterally imposed by the United States.
It is important to note that US sanctions programmes vary considerably and what is prohibited with regard to one country may be permitted or licensable with regard to another.
OFAC Global Maritime Advisory
On 14 May 2020, OFAC issued an Advisory to alert the Maritime Industry to deceptive shipping practices and includes a detailed set of best practices for private industry to consider adopting to mitigate exposure to sanctions risk.
All U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, such as those regarding Cuba, Iran and North Korea, all foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S. origin goods to comply.
Specially Designated Nationals (SDNs)
US sanctions programmes go far beyond the borders of target countries. The US Government has identified and listed thousands of front organisations and individuals known as "Specially Designated Nationals," or SDNs, to further the effectiveness of the sanctions regimes. SDNs are individuals and entities located anywhere in the world that are owned or controlled by, or acting for or on behalf of, the Government of a sanctioned country, as well as designated international narcotics traffickers and terrorists targeted by the United States Government. The list also includes the names of vessels which have been determined to be owned or controlled by the targeted countries.
These vessels, companies, individuals, and banks may not appear to be related to the sanctions targets they actually represent. Many of these SDNs have innocuous names and are located in countries with which the United States enjoys harmonious trade relations, which is why it is important to carefully screen all parties involved in trade transactions using OFAC’s SDN list. All property and interests in property of SDNs that come into the possession of a U.S. corporation will be blocked.
Penalties for sanction violations
Depending on the program, criminal penalties can include fines ranging from $50,000 to $10,000,000 and imprisonment ranging from 10 to 30 years for willful violations. Depending on the program, civil penalties range from $250,000 or twice the amount of each underlying transaction to $1,075,000 for each violation. Vessels involved in trade contrary to the sanctions regulations may be subject to seizure and forfeiture.
OFAC has the authority to authorise transactions which would otherwise be prohibited under specific sanctions provisions. OFAC’s Licensing Division reviews all license applications on a first-in, first-out, case-by-case basis and issues or denies licenses based on US foreign policy and national security goals. Filing a complete application will expedite processing, but there are no guarantees that a license will be issued just because one is requested. The OFAC Licensing Division can be reached at +1 202 622 2480 for further licensing information, applications, or about the status of a pending application.
On 16 January 2015 the amended Cuban Assets Control Regulations (31 C.F.R. § 515) came into effect upon publication in the Federal Register implementing policy changes as announced by the President on 17 December 2014. One of the amendments is to section 515.550 Certain vessel transactions authorized which broadened the definition of vessels permitted to engage in trade with Cuba, subject to specific licensing requirements.
§515.550 was updated 17 October 2016 to read:
§ 515.550 Certain vessel transactions authorized.
(a) Unless a vessel is otherwise engaging or has otherwise engaged in transactions that would prohibit entry pursuant to § 515.207, § 515.207 shall not apply to a vessel that is:
(1) Engaging or has engaged in trade with Cuba authorized pursuant to this part;
Note to paragraph (a)(1):
The authorization in this paragraph includes, for example, trade with Cuba authorized pursuant to § 515.533, § 515.559, or § 515.582, or by specific license.
(2) Engaging or has engaged in trade with Cuba that is exempt from the prohibitions of this part (see § 515.206);
(3) Engaging or has engaged in the exportation or re-exportation to Cuba from a third country of agricultural commodities, medicine, or medical devices that, were they subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), would be designated as EAR99;
(4) A foreign vessel that has entered a port or place in Cuba while carrying students, faculty, and staff that are authorized to travel to Cuba pursuant to § 515.565(a); or
(5) Carrying or has carried persons between the United States and Cuba or within Cuba pursuant to the authorization in § 515.572(a)(2) or, in the case of a vessel used solely for personal travel (and not transporting passengers), pursuant to a license or other authorization issued by the Department of Commerce for the exportation or re-exportation of the vessel to Cuba.
(b) Unless a vessel is otherwise engaging or has otherwise engaged in transactions that would prohibit entry pursuant to § 515.207, § 515.207(a) shall not apply to a foreign vessel that has engaged in the exportation to Cuba from a third country only of items that, were they subject to the EAR, would be designated as EAR99 or would be controlled on the Commerce Control List only for anti-terrorism reasons.
[81 FR 71376, Oct. 17, 2016]”
§515.207 is set out below:
§515.207 Entry of vessels engaged in trade with Cuba.
Except as specifically authorized by the Secretary of the Treasury (or any person, agency or instrumentality designated by him), by means of regulations, rulings, instructions, licenses or otherwise,
(a) No vessel that enters a port or place in Cuba to engage in the trade of goods or the purchase or provision of services, may enter a U.S. port for the purpose of loading or unloading freight for a period of 180 days from the date the vessel departed from a port or place in Cuba; and
(b) No vessel carrying goods or passengers to or from Cuba or carrying goods in which Cuba or a Cuban national has an interest may enter a U.S. port with such goods or passengers on board.
NOTE TO §515.207: For the waiver of the prohibitions contained in this section for vessels engaged in certain trade and travel with Cuba, see §515.550.
[58 FR 34710, June 29, 1993, as amended at 66 FR 36687, July 12, 2001; 80 FR 2292, Jan. 16, 2015; 80 FR 56918, Sept. 21, 2015]
Cuba is listed as a "non-entrant country". Hence, Cuban vessels are not permitted to enter US ports, internal waters, or territorial seas except when engaged in innocent passage, under the conditions of force majeure, or distress situations involving a medical emergency.
Non Cuban registered, owned, operated or chartered vessels are governed in part by the "Cuban Democracy Act 1992" (CDA) and the "Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996"
The "Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996" (also known as the Helms-Burton Act) is aimed at discouraging foreign investment in Cuba in former U.S. property nationalised by the Cuban government in 1959. The legislation has been drafted in such broad and ambiguous terms that it is very difficult to interpret the effects of this Act on international shipping.
However, Title IV provides for the exclusion from the United States, either through denial of a visa or exclusion at the port of entry, of any foreign national who the Secretary of State determines is a person who, "traffics" in "confiscated" property in Cuba, a claim to which is owned by a US national. Title IV requires the exclusion of corporate officers, principals or controlling shareholders of companies that engage in such trafficking, as well as the spouse, minor child or agent of persons excluded.
Title IV defines "traffics" to include: transfers, distributes, dispenses, brokers or otherwise disposes of confiscated property; purchases, receives, obtains control of, or otherwise acquires confiscated property; or improves or invests in (other than for routine maintenance) or begins to manage, lease, possess, use or hold an interest in confiscated property. The term "traffics" also covers entry into a commercial arrangement using or otherwise benefiting form confiscated property, as well as causing, directing, participating in or profiting from trafficking by or through another person or entity.
Information about e.g. the “180-day rule” and the “goods/passengers-on-board rule” can also be found in the “Frequently Asked Questions” (FAQ) to Cuba sanctions. Please refer to the below link to the U.S. Department of the Treasury – Frequently Asked Questions – Cuba Sanctions