Author: Poblete Tamargo LLP

Posted on

PT Law Attorney Discusses Confiscated Properties in Cuba

(Washington, DC) Mauricio Tamargo was interviewed by the Globe and Mail in Canada about unresolved U.S. claims against the government of Cuba for unlawfully confiscated properties, businesses, as well as unpaid financial obligations and other claims that the government of Cuba owes American citizens and other persons:

“Former chair of the U.S. Foreign Claims Settlement Commission, Mauricio J. Tamargo, says that, in fact, the American claims are not based on paper values; rather, Washington arrived at its final tally by looking at a combination of real-estate property taxes, comparables in sales prices at the time of the revolution, and receipts of improvements at the time of expropriation.

Now a lawyer at law firm PobleteTamargo in Washington, the Havana-born Tamargo adds that the list of claimants isn’t up-to-date: Many individual claimants have passed away, and their relatives have not given notice; some corporate claimants could have gone into bankruptcy or have new owners who are unaware of any claim. “The U.S. government,” he explains, “has been somewhat negligent in setting up a system for keeping the claims current.”

“Regardless, he insists, what has happened to property since its seizure does not affect the value of a certified claim – that is a precept of international law.

You can read the rest of the story at the Globe and Mail.

 

Posted on

CLIENT ALERT — United States Government Publishes A List of Goods and Services that May Be Imported to the United States from Cuban “Cuentapropistas”

In addition to creating flexibility for certain travel and financial transactions, the CACR amendments announced by the Obama administration on January 16 also allow Americans to send unlimited amounts of money to individual Cubans, not tied to the government, in support of private businesses and independent non-governmental organizations. And in a rather somewhat historic move, the U.S. is also allowing persons subject to U.S. jurisdiction to engage in certain micro-finance activities, entrepreneurial training, and development projects in Cuba. 

This carve-out or exception to U.S.-Cuba sanctions allow persons and companies subject to U.S. law to export items to Cuba including building materials, equipment, tools, and supplies for use by Cuban “private sector,” and not any entity owned or operated by the Cuban government. Cuba’s “private sector” remains a very small percent of the overall Cuban economy, subject to significant regulation and monitoring by the state. It will present special compliance challenges for Americans, and other persons subject to U.S. law. 

Under Cuban Law and Decrees, “Self-Employment” is Akin to License, A Slight Exception to the Cuban Communist’s Party’s Official Role in the Economy 

Earlier efforts by the Communist Party, the only legal political party in Cuba, to create “self-employment” (Decree Law 14, July 1978), failed for political, ideological, and economic reasons.  However, there has been pressure to change this for many years because the centrally planned system has been failing for decades and is in desperate need of funds to support government-run social and other programs. 

“Self-employment” in Cuba, if it can be called that, has been legal since the early 1990s when on Decree Law 141 went into effect on September 9, 1993. Decree Law 141 lists, among other things, more than 100 occupations that would qualify for the new license for a person in Cuba do business on their own. These are the people that the United States wishes to assist with the recent regulatory changes to the CACR.

Self-employment in Cuba, known as  “trabajadores por cuenta propia”  (“TCP”) or “cuentapropistas” should not, for compliance purposes, be viewed in the same was as self-employment is categorized in the United States. The Communist Party decides what “jobs” will qualify for the TCP special exception to the Cuban Socialist Constitution and they add occupations to the list as needs warrant. 

Ultimately, and as a matter of law, Cuban workers, even TCPs, work for the benefit of the state and it remains to be seen if this opening in the Cuban economy will continue or if, as it has happened in the past, will be shut down by the government on a haphazard basis or when it suits them for political reasons to do so.

Compared to the overall as well as potential labor pool, the number of TCPs is minuscule. Cuba’s workforce of approximately 4 million people, works overwhelmingly for the state. According to recent data from Cuba as well as U.S. sources, about 93% of the Cuban work force is employed by the government. As of 2014, there are roughly just 450,000 TCPs. These TCPs are mainly home-run family restaurants and persons operating taxi or car services for tourists. The data is hard to come by. Because of the fees and regulations imposed by the state on TCPs, many potential and official TCPs prefer to operate in Cuba’s thriving black market or underground economy. 

Finally, Cuban TCPs, unlike workers in the United States and other nations, do not enjoy or possess legal rights to things such as private property or, ironically, strong labor rights.  Americans considering engaging in these new transactions in Cuba should also understand that dispute resolution mechanisms, due process of law, and other well established concepts in business and law are not widely available or simply not well-known in Cuba’s nascent “official” business culture. 

The Cuban government’s claims that there are changes coming in these and other related areas, but even if that were true, I have talked with lawyers on the island who say these proposed reformas are, at this juncture, more aspirational than reality. In fact the State Department says on its website that “[w]e cannot predict what the Cuban government will or will not allow, but we sincerely hope that it makes this and other new opportunities available to Cuba’s nascent private sector.”

Special Considerations for Americans and Other Persons Subject to U.S. Law

The new U.S. import rules are are authorized pursuant to what is known as a “general license,” (no special forms or application is needed); however, these transactions are still subject to many provisos, exceptions, and record-keeping requirements. Express prohibitions remain in place that ban persons subject to U.S. law from engaging in transactions in a wide array of situations that include, but are not limited to, transactions with Cuban government agencies, high-ranking Cuban officials and family members, human rights abusers, and individuals trafficking in properties that are subject to a U.S. certified claim. 

The “Section 515.582 List” published today include goods and services produced or provided by independent Cuban entrepreneurs — TCPs — that are imported into the United States directly from Cuba, except for goods specified in several sections/chapters of the Harmonized Tariff Schedule of the United States (HTS). 

According to the U.S. government, persons subject to U.S. jurisdiction engaging in import transactions involving goods produced by an independent Cuban TCPs pursuant to 31 C.F.R. § 515.582 must obtain documentary evidence that demonstrates the entrepreneur’s independent status, such as a copy of a license to be self-employed issued by the Cuban government or, in the case of an entity, evidence that demonstrates that the entrepreneur is a private entity that is not owned or controlled by the Cuban government. On this point of documentary evidence, the State Department says:

The Cuban government issues licenses to private individuals for self-employment or to operate small private businesses. Evidence that the entrepreneur holds this license, such as a copy of the license, is one way that a person subject to U.S. jurisdiction can show that the entrepreneur that provided the goods/services intended for importation holds independent status. However, third party verification by an independent organization may also suffice in the future. 

In other words, what constitutes “documentary evidence” is a work in progress.  

Finally, U.S. persons subject to the CACR should also be aware that there are express prohibitions in U.S. law that ban what is known as “trafficking” in Cuban properties that are subject to claims under U.S. law. 

During the early years of the Cuban Revolution, the Cuban government confiscated properties, businesses, or refused to honor debts and its other financial obligations of held by hundreds of thousands of American citizens and Cuban nationals.  Although legally-required to do under Cuban as well as well-established international law norms,  the Cuban government never paid compensation for any of these unlawful confiscations. The current value, for example, of U.S. Certified claims alone is close to $8 billion. Without U.S. government approval, rare in these cases, persons subject to U.S. law are prohibited from engaging in transactions in Cuba if a property that is subject of a claim is part of a transaction.

While some of these policy changes are historic, I’m sticking with what I told the Wall Street Journal February 2 and caution that there still remains a great deal of ‘irrational exuberance’ about what these changes will mean for Americans, and to a certain extent, Cuban TCPs. If you plan to engage in transactions with TCPs, you should strongly consider retaining counsel familiar with U.S. laws, regulations, and policy , as well as some knowledge Cuban laws and realities on the ground in Cuba. 

It will be interesting to see in the weeks and months ahead how the United States government deals with questions of potential trafficking in properties in Cuba, as well as the other potential legal minefields that certainly lay ahead. We will be publishing updates and additional analysis on this matter in the near future. The “Section 515.582 List” can be accessed at the State Department website.

In the meantime, if you would like more information about this or other trade security issues related to Cuba or other countries or programs, please give us a call. 

Client Alerts are provided for informational purposes only and should not be relied on for legal advice. Client Alerts are summaries and may be considered an advertisement for certain purposes; they are not full analyses of the matters presented. Unless otherwise indicated, they do not represent the views of our clients or the firm. Please contact a Poblete Tamargo lawyer, or your counsel, for specific legal advice for your particular matter. For more information visit our website at www.pobletetamargo.com or e-mail us at info@pobletetamargo.com. 

 

Posted on

WSJ: Sanctions Experts Warn Against Cuba ‘Irrational Exuberance’

(Washington, DC) Jason Poblete, an attorney with Poblete Tamargo was interviewed and quoted by the Wall Street Journal’s Risk & Compliance Journal about recent developments in U.S.-Cuba policy:

“U.S. companies are excited about taking advantage of new openings so close to home. But it will be years before the thaw in relations materializes into large-scale opportunities for U.S. firms, say attorneys that specialize in sanctions law. “There is a lot of what I’d call ‘irrational exuberance about Cuba right now,” said Jason Poblete, a trade attorney at Poblete Tamargo LLP.”

“… And sanctions aside, doing business with a Communist state provides obstacles of its own, Mr. Poblete said. For example, the Cuban government’s actual appetite for the kinds of telecom equipment now allowed is unclear and untested. And much of business in the country still needs to be done in cash, Mr. Poblete said. “People see Cuba as this forbidden fruit, this closed economy with all this potential,” Mr. Poblete said. “But it may be years before you really see these opportunities.”

Read the entire post here.

Posted on

White House Releases Proposed Data Notification Bill

Who Is Covered?

The proposed bill covers all types of business entities, profit and not for profits.  State and Federal governments are not covered.

How Is Data Defined?

The proposed bill has a detailed definition of personal information. The bill defines “sensitive personally identifiable information” as “any information or compilation of information in electronic or digital form that includes:

  • An individual’s first and last name or first initial or last name in combination with any two of the following data elements: home address or phone number; mother’s maiden name; month, day, and year of birth.
  • One’s complete Social Security number, driver’s license, passport number, alien registration number or government issued unique identification number
  • Biometric data
  • A unique account identifier (i.e. credit card number, financial account number, routing code, electronic identification number, and user name).
  • User name or e-mail address in combination with a password or security question and answer
  • A combination of data elements.”

What Is The Protocol?

Pursuant to the proposed legislation, notification would apply to all business entities “engaged in or affecting interstate commerce, that uses, access, transmits, stores, disposes of or collects sensitive personally identifiable information about more than 10,000 individuals during any 12 month period…” Notification is required immediately after the discovery of the breach, however one can request a thirty-day extension, unless a federal law enforcement agency requests for additional time due to an active investigation.

The bill also provides company with exceptions from compliance. Exceptions can include, but not limited to matters of national security, the information was encrypted, security programs that automatically notifies the user of a fraudulent use of the credit card. 

The other exemption is the risk assessment exception. The risk assessment exception is when an entity conducts a study of its data security system and shows that the data breach would pose no reasonable risk due to how the information is protected.  The risk assessment is evaluated under the data security standards. Failure to comply with these standards would be a violation under the unfair or deceptive trade standard. The risk assessment exception must be in writing and documentation of the assessment must be shown within thirty-days after the alleged incident.

If there are no exceptions, notice must be given to the victims. The notice must include the description of their personal information that was hacked, a toll free number that the individual may call the entity for further information, major credit reporting agencies, the Federal Trade Commission, and any assistance that the state may provide where the victim may live. 

Who Has Jurisdiction?

The Federal Trade Commission has jurisdiction under the proposed legislation. As previously stated, the Federal Trade Commission would use the unfair or deceptive trade standard to enforce any and all violations. 

What Is The Impact To State Notification Laws?

The proposed legislation would supersede all state notification laws as it applies to the entities as already defined.  However, state attorneys can file a data breach action against the entities only if “the interest of residents of that State has been or is threatened or adversely affected by the engagement of a business entity in a practice that is prohibited under this title or the failure to meet a requirement imposed under this title…” If the state does meet this standard, it can impose, among other things, a $1,000 Dollar fine per victim up to $1,000,000 Dollars.

Potential Issues:

With any new proposed legislation, there are many issues that Congress and the White House would need to work on. 

One of the first issues involves the jurisdiction matter concerning the other data breach statues. Currently, there are federal data breach provisions for the medical sector (HIPPA and HITECH), financial sector (GLBA), and the education sector (FERPA). Although entities covered under HITECH, there are no exemptions under the other aforementioned legislation. Any federal data breach legislation needs to either exempt the aforementioned legislation or incorporate them into the legislation. Failure to do so would result in confusion, such as double jeopardy if two federal agencies were prosecuting the same entity under different federal legislation covering data breaches.

Congress also needs to clarify the state’s role under this section. The question of double jeopardy would also apply here if a state files suit after the Federal Trade Commission issued its administrative decision. 

We can expect more data breaches occurring such as the one impacting Target, Sony, or even our own government in 2015. The pressure of having a federal data breach will mount with each breach. However, both Congress and the White House would need to work together to develop data breach legislation that is clear, concise, and complements the other federal data breach provisions.

We will keep you updated regarding the progress of this legislation and please do not hesitate to contact us to discuss ways that we can help your company become data privacy compliant prior to any federal data breach law is passed.