Economic Sanctions: Agencies Face Competing Priorities in	 
Enforcing the U.S. Embargo on Cuba (30-NOV-07, GAO-08-80).	 
                                                                 
The 48-year U.S. embargo on Cuba aims to deny resources to the	 
Castro regime by prohibiting most trade, travel, and financial	 
transactions with Cuba. The departments of Commerce, Homeland	 
Security (DHS), Justice, and the Treasury are responsible for	 
enforcing the embargo as well as protecting homeland and national
security. Since 2001, U.S. agencies have changed the embargo's	 
rules in response to new laws and policies. GAO was asked to	 
examine (1) the rule changes in 2001-2005 and their impact on	 
U.S. exports, travel, cash transfers, and gifts to Cuba; (2) U.S.
agencies' embargo-related activities and workloads; and (3)	 
factors affecting the embargo's enforcement. GAO analyzed laws,  
regulations, and agency data, interviewed agency officials, and  
observed agency activities at Port Everglades and Miami 	 
International Airport, Florida. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-80						        
    ACCNO:   A78569						        
  TITLE:     Economic Sanctions: Agencies Face Competing Priorities in
Enforcing the U.S. Embargo on Cuba				 
     DATE:   11/30/2007 
  SUBJECT:   Exporting						 
	     Foreign governments				 
	     Foreign trade policies				 
	     Homeland security					 
	     International trade regulation			 
	     International travel				 
	     Law enforcement					 
	     Law enforcement agencies				 
	     Sanctions						 
	     Trade agreements					 
	     Trade regulation					 
	     Policies and procedures				 
	     Cuba						 

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GAO-08-80

   

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Report to Congressional Requesters: 

November 2007: 

Economic Sanctions: 

Agencies Face Competing Priorities in Enforcing the U.S. Embargo on 
Cuba: 

GAO-08-80: 

GAO Highlights: 

Highlights of GAO-08-80, a report to congressional requesters. 

Why GAO Did This Study: 

The 48-year U.S. embargo on Cuba aims to deny resources to the Castro 
regime by prohibiting most trade, travel, and financial transactions 
with Cuba. The departments of Commerce, Homeland Security (DHS), 
Justice, and the Treasury are responsible for enforcing the embargo as 
well as protecting homeland and national security. Since 2001, U.S. 
agencies have changed the embargoï¿½s rules in response to new laws and 
policies. GAO was asked to examine (1) the rule changes in 2001-2005 
and their impact on U.S. exports, travel, cash transfers, and gifts to 
Cuba; (2) U.S. agenciesï¿½ embargo-related activities and workloads; and 
(3) factors affecting the embargoï¿½s enforcement. GAO analyzed laws, 
regulations, and agency data, interviewed agency officials, and 
observed agency activities at Port Everglades and Miami International 
Airport, Florida. 

What GAO Found: 

The loosening of embargo rules on some exports led to increased 
agricultural shipments to Cuba, but the impact of tighter restrictions 
on travel, cash transfers, and gifts is unknown. In 2001, responding to 
a new law, Treasuryï¿½s Office of Foreign Assets Control (OFAC) and 
Commerceï¿½s Bureau of Industry and Security (BIS) loosened embargo 
restrictions on some trade with Cuba. U.S. exports to Cubaï¿½mostly 
agricultural productsï¿½rose from about $6 million to about $350 million 
from 2000 to 2006. In 2004, responding to new administration policy, 
OFAC tightened rules on travel to Cuba, for example, by requiring that 
all family travelers obtain specific Treasury licenses and reducing the 
permitted frequency of family visits from once a year to once every 3 
years, and it also tightened rules for sending cash transfers and gift 
parcels. Because reliable data are not available, the impact of these 
tighter restrictions on travel, cash transfers, and gifts cannot be 
determined. 

U.S. agencies enforce the Cuba embargo primarily by licensing and 
inspecting exports and travelers and by investigating and penalizing or 
prosecuting embargo violations. BIS processed twice as many exports 
license applications for Cuba in 2006 than in 2001, and OFAC issued 
about 40 percent more Cuba travel licenses in 2006 than in 2003. 
Reflecting the administrationï¿½s embargo-tightening policy, DHSï¿½s 
Customs and Border Protection (CBP) inspects all exports to Cuba at 
Port Everglades and, since 2004, has increased intensive, ï¿½secondaryï¿½ 
inspections of passengers arriving from Cuba at the Miami airport; in 
2007, CBP conducted these inspections for 20 percent of arrivals from 
Cuba versus an average of 3 percent of other international arrivals. 
CBP data and interviews with agency officials suggest that the 
secondary inspections of Cuba arrivals at the airport may strain CBPï¿½s 
ability to carry out its mission of keeping terrorists, criminals, and 
other inadmissible aliens from entering the country. Moreover, recent 
GAO reports have found weaknesses in CBPï¿½s inspections capacity at key 
U.S. ports of entry nationwide. After 2001, OFAC opened more 
investigations and imposed more penalties for embargo violations, such 
as buying Cuban cigars, than for violations of other sanctions, such as 
those on Iran. In contrast, BIS, DHSï¿½s Immigration and Customs 
Enforcement, and Justice have primarily investigated, penalized, or 
prosecuted export violations and crimes that present a greater threat 
to homeland and national security or public safety. 

U.S. officials and others told GAO that several factors hinder 
enforcement of the Cuba embargo, sometimes acting in concert. (1) Lack 
of cooperation from foreign countries has undercut the embargoï¿½s 
effectiveness and hampered inspections and investigations. (2) Divided 
U.S. public opinion, particularly regarding the new travel and cash 
transfer restrictions, has contributed to widespread, small-scale 
embargo violations and the selling of fraudulent religious and other 
travel licenses, among other problems. (3) Some embargo violations are 
difficult to detect or control, such as fraudulent licenses and on-line 
money transfers via third countries. (4) The embargoï¿½s complexity and 
changing rules may have led to unintended violations by some 
individuals and companies. 

What GAO Recommends: 

GAO recommends that (1) CBP reassess whether its use of resources for 
intensive inspections of arrivals from Cuba at the Miami airport 
effectively balances enforcing the embargo with protecting homeland 
security and (2) OFAC assess its use of resources for investigating and 
penalizing Cuba embargo violations. CBP agreed with the intent of a 
draft recommendation on using risk-based inspections at the airport but 
considered it unwarranted. Using additional CBP data, GAO revised its 
report and recommendation as appropriate. OFAC commented that it 
allocates resources based on several factors. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-80]. For more information, contact David 
Gootnick at (202) 512-3149 or [email protected] 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Loosening Embargo Led to Increased U.S. Exports, but Impact of Tighter 
Restrictions on Travel, Remittances, and Gifts Is Unknown: 

Agencies Performed More Licensing and Inspections, Straining Inspection 
Resources, while Most Investigations and Penalties Targeted Minor 
Violations: 

U.S. Agencies Face Several Challenges in Enforcing the Embargo on Cuba: 

Conclusions: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Evolution of the U.S. Embargo: 

Appendix III: U.S. Sanctions on Cuba and Other Countries: 

Appendix IV: OFAC Investigations and Civil Penalties for Violations of 
the Cuba Embargo and Other Sanctions Programs, 2000-2006: 

Appendix V: Results of Votes in the UN General Assembly on Resolutions 
Calling for an End to the U.S. Embargo on Cuba: 

Appendix VI: Comments from the Department of Homeland Security: 

Appendix VII: Comments from the Department of the Treasury: 

Appendix VIII: Comments from the Department of State: 

Appendix IX: Comments from the Department of Commerce: 

Appendix X: GAO Contact and Staff Acknowledgments: 

Tables Tables: 

Table 1: U.S. Agencies' Cuba Embargo Enforcement Activities: 

Table 2: Key Agency Missions and Priorities: 

Table 3: Trade and Related Rule Changes Implementing TSRA : 

Table 4: Restrictions on Family, Educational, and Religious Travel 
before and after 2004-2005: 

Table 5: Restrictions on Remittances and Gift Parcels to Cuba before 
and after 2004 Embargo Rule Changes: 

Table 6: Composition of U.S. Exports to Cuba in 2006: 

Table 7: Comparison of Cuba Travel Licenses Issued by OFAC, 2002-2003 
and 2005-2006: 

Table 8: Evolution of the U.S. Embargo on Cuba, 1960-2007: 

Table 9: Comparison of U.S. Sanctions on Cuba, Iran, North Korea, 
Sudan, and Syria: 

Table 10: OFAC Investigations of Suspected Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

Table 11: OFAC Penalty Cases and Fines for Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

Table 12: Results of Votes in the UN General Assembly on Resolutions 
Calling for an End to the U.S. Embargo on Cuba, 1992-2007: 

Figures Figures: 

Figure 1: Cuban Agricultural Imports from the United States and Other 
Countries, 2000-2006: 

Figure 2: Data on U.S. Travel to Cuba and Travel Licenses Issued, 2000- 
2006: 

Figure 3: Cuba Export License Applications Processed by BIS, Fiscal 
Years 1999-2006: 

Figure 4: OFAC Investigations of Suspected Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

Figure 5: OFAC Civil Penalty Cases and Fines for Violations of the Cuba 
Embargo, 2000-2006: 

Abbreviations:  

BIS: Bureau of Industry and Security (under Commerce): 

CACR: Cuban Assets Control Regulations: 

CAFC: Commission for Assistance to a Free Cuba: 

CBP: Customs and Border Protection (under DHS): 

DHS: Department of Homeland Security: 

EU: European Union: 

GDP: gross domestic product: 

ICE: Immigration and Customs Enforcement (under DHS): 

ITC: International Trade Commission: 

OAS: Organization of American States: 

OEE: Office of Export Enforcement (under BIS): 

OFAC: Office of Foreign Assets Control (under Treasury): 

TSRA: Trade Sanctions Reform and Export Enhancement Act of 2000: 

UN: United Nations: 

Letter November 30, 2007: 

The Honorable Charles B. Rangel: 
Chairman: 
Committee on Ways and Means: 
House of Representatives: 

The Honorable Barbara Lee: 
House of Representatives: 

For nearly five decades, the United States has maintained a 
comprehensive embargo on Cuba through various laws, regulations, and 
presidential proclamations regarding trade, travel, and financial 
transactions. The stated purpose of this embargo--the most 
comprehensive set of U.S. economic sanctions on any country--is to 
weaken the Castro regime by denying it hard currency. To achieve this 
goal, the Cuban Assets Control Regulations (CACR),[Footnote 1] which 
the Department of Treasury's Office of Foreign Assets Control (OFAC) 
administers, generally prohibit all trade, travel, and financial 
transactions with Cuba or Cuban nationals by U.S. citizens, residents, 
foreign visitors, or foreign subsidiaries of U.S. firms. Trade with 
Cuba also is subject to U.S. export control laws and regulations; for 
example, because the United States has designated Cuba a state sponsor 
of terrorism, certain military items are statutorily prohibited from 
being exported to Cuba. Agencies, bureaus, and offices under the 
Departments of Commerce, Homeland Security (DHS), Justice, and Treasury 
enforce the Cuba embargo,[Footnote 2] primarily by licensing exports, 
travel, financial, and other transactions; inspecting exports and 
travelers; investigating suspected embargo violations; and penalizing 
or prosecuting violators. The agencies carry out these activities in 
the context of responsibilities for homeland security, for which they 
are expected to use risk management as a means of allocating limited 
resources effectively.[Footnote 3] 

The rules of the embargo have changed several times since 2001 in 
response to new legislation and administration policies. The Trade 
Sanctions Reform and Export Enhancement Act of 2000 (TSRA)[Footnote 4] 
required the President to lift unilateral U.S. sanctions on commercial 
sales of food, agricultural commodities, and medical products worldwide 
and permitted the export of these goods to Cuba and other designated 
state sponsors of terrorism, subject to licensing. In addition, since 
mid-2003, the administration has introduced policies aimed at 
tightening the embargo on Cuba. In 2003, for example, the President 
directed DHS to tighten enforcement of the embargo, and, in 2004, the 
President initiated tighter restrictions on travel, cash remittances, 
and gifts to Cuba. These tighter restrictions reflected recommendations 
by the interagency Commission for Assistance to a Free Cuba 
(CAFC),[Footnote 5] which concluded that the Cuban government captures 
a percentage of the money spent by U.S. residents on travel, cash 
remittances, and gifts through a variety of taxes and fees and this 
hard currency helps keep the Cuban government in power. The 
administration plans to introduce additional changes to the embargo 
based on the commission's recommendations and is exploring measures to 
further tighten the embargo. 

In response to your request, we examined (1) the changes to the embargo 
rules in 2001 through 2005 and these changes' impact on U.S. exports, 
travel, cash remittances, and gifts to Cuba; (2) U.S. agencies' 
activities and workloads in enforcing the embargo; and (3) factors that 
have affected the embargo's enforcement. In conducting this review, we 
analyzed applicable laws, agency regulations and other records, and 
studies of the Cuba embargo. To identify agencies' enforcement 
activities and obtain information on workloads and staffing, we 
analyzed data from Commerce, DHS, Justice, State, Treasury, and other 
sources and interviewed appropriate agency officials. Additionally, we 
observed agency screening of cargo at Port Everglades (Ft. Lauderdale) 
and inspections of passengers and baggage at Miami International 
Airport, Florida,[Footnote 6] and discussed investigations and 
prosecutions of embargo violations with headquarters and field 
officials. We also obtained officials' and others' views and reviewed 
data regarding factors that affect enforcement of the Cuba embargo and 
other sanctions. (See app. I for additional information about our scope 
and methodology.) We conducted our work between December 2006 and 
November 2007 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

The loosening of embargo rules on some exports led to increased 
commercial agricultural shipments to Cuba. However, the impact of 
tighter restrictions on travel, cash remittances, and gifts to Cuba is 
unknown. 

* Exports. In 2001, as required by TSRA, Commerce's Bureau of Industry 
and Security (BIS) introduced new, streamlined procedures to expedite 
processing of license applications for exporting eligible agricultural 
commodities to Cuba, and OFAC clarified rules for vessels carrying 
exports to Cuba. From 2000 through 2006, annual U.S. exports to Cuba 
rose substantially, from $6 million to about $350 million, with the 
result that U.S. exports to Cuba over the period totaled more than $1.5 
billion. Agricultural products have comprised the majority of U.S. 
exports to Cuba--98 percent of total exports in 2006. U.S. exports of 
medical products to Cuba are limited because they remain subject to 
other statutory restrictions and are licensed through BIS's standard 
licensing process. 

* Travel. In 2004, reflecting administration policy, OFAC began 
tightening restrictions on U.S. travel to Cuba. Rule changes included 
reducing the permitted frequency of family visits from once every 12 
months to once every 3 years; restricting visits to immediate family; 
lowering the allowed per diem--the amount of money that family 
travelers may spend per day--from $167 to $50; requiring each family 
traveler to obtain a license; eliminating the license for additional 
family visits in cases of humanitarian need; and increasing 
restrictions on educational and religious travel. Because no reliable 
data are available, the impact of the new restrictions on travel to 
Cuba cannot be determined. 

* Remittances and gifts. In 2004, reflecting administration policy, 
OFAC and BIS tightened restrictions on sending cash remittances and 
gift parcels to Cuba. Rule changes included restricting remittance 
recipients to senders' immediate family, expanding the ban on 
remittances or gifts to senior Cuban government and Communist Party 
officials, and drastically reducing the value of remittances that 
travelers could carry to Cuba. Rule changes also restricted the 
recipients and contents of gift parcels. Because no reliable data are 
available, the impact of the new restrictions on remittances and gifts 
to Cuba cannot be determined. 

After the embargo rule changes in 2001 and 2004, BIS and OFAC licensing 
of exports and travel to Cuba increased. DHS's Customs and Border 
Protection (CBP) inspections of exports to Cuba and of passengers 
arriving from Cuba also increased, reflecting administration policy, 
with the passenger inspections straining agency resources at Miami 
International Airport. In addition, OFAC cases related to the Cuba 
embargo comprised a large percentage of the agency's investigation and 
penalty caseload from 2000 through 2006, although it administers more 
than 20 sanctions programs. In contrast, BIS, DHS's Immigration and 
Customs Enforcement (ICE), and Justice reported undertaking relatively 
few investigations, penalties, and prosecutions of Cuba embargo 
violations because of their focus on competing homeland and national 
security priorities. 

* Licensing. Following implementation of the TSRA-related rule changes 
in mid-2001, the number of export license applications for Cuba that 
BIS processed each year doubled, from 263 in fiscal year 2001 to 544 in 
fiscal year 2006. Similarly, following implementation of the new 
restrictions in 2004, the number of licenses that OFAC issued for 
travel to Cuba each year increased by 38 percent, from about 30,100 in 
2003 to about 41,300 in 2006. The impact of the increased export 
licensing workload on BIS resources is unclear because the agency lacks 
reliable staffing data about some of its most difficult cases.[Footnote 
7] OFAC responded to the increased travel licensing workload by 
reassigning staff at its Miami field office from auditing and public 
outreach activities,[Footnote 8] but like BIS, OFAC lacks reliable 
staffing data. Recent OFAC audits have identified significant 
violations at some firms. 

* Inspections. Since 2004, consistent with changes in administration 
policy and embargo rules, CBP has screened all exports to Cuba from 
Port Everglades[Footnote 9] and conducted intensive (secondary) 
inspections of more passengers and their baggage arriving from Cuba at 
Miami International Airport.[Footnote 10] According to CBP, the 
increase in secondary inspections reflects its assessed risk of Cuba 
embargo violations by arriving passengers after the 2004 rule changes. 

* Exports. According to CBP officials, CBP screens all shipments to 
Cuba from Port Everglades--about 50 shipments out of a total of 26,000 
per month--with limited impact on agency resources at the port. CBP 
officials noted that Cuba-bound shipments at Port Everglades appear to 
be at low risk for embargo violations, given the repetitive nature of 
the shipments--mostly agricultural products--and the observed high 
level of carrier and shipper compliance. 

* Passengers. CBP said that it increased its secondary inspection of 
passengers arriving from Cuba to reflect an increased risk of embargo 
violations after the 2004 rule changes, which, among other things, 
eliminated the allowance for travelers to import a small amount of 
Cuban products for personal consumption. CBP data show that in fiscal 
year 2007, about 20 percent of passengers arriving at Miami from Cuba 
were referred for secondary inspection, compared with about 3 percent 
of passengers arriving at the airport from other countries. CBP data, 
as well as statements by CBP officials, suggest that the high rate of 
secondary inspections of arrivals from Cuba and the numerous resulting 
seizures (mostly small amounts of Cuban tobacco, alcohol, and 
pharmaceuticals) occupy a majority of the agency's inspection 
facilities and resources at the Miami airport,[Footnote 11] straining 
CBP's capacity to inspect other travelers according to its mission of 
keeping terrorists, criminals, and inadmissible aliens out of the 
country. This impact occurs in the context of recent GAO reports of 
weaknesses in CBP's inspection capacity at major ports of entry 
nationwide that increase the potential for terrorists' and inadmissable 
travelers' entering the country. These reports emphasize that effective 
use of secondary inspection resources is critical to CBP's 
accomplishing its priority antiterrorism mission.[Footnote 12] 

* Investigations. OFAC, BIS's Office of Export Enforcement (BIS/OEE), 
and ICE reported that since 2001, they have shifted resources from 
investigations of suspected Cuba embargo violations to higher 
priorities. Although the Cuba embargo is one of more than 20 sanctions 
programs OFAC administers,[Footnote 13] embargo-related cases comprised 
61 percent of OFAC's investigatory caseload from 2000 through 2006. 
OFAC officials said that Cuba cases require fewer resources per case 
than do investigations of suspected violations of other sanctions; 
however, they were unable to provide data showing allocations for the 
Cuba embargo or other investigations. In contrast, Cuba embargo-related 
cases comprise a minor part of BIS/OEE's and ICE's investigation 
caseloads (3 percent and 0.2 percent, respectively); agency officials 
stated that cases related to controlling the spread of sensitive 
technology or protecting homeland security have been given higher 
priority. 

* Penalties and prosecutions. Although the Cuba embargo is one of more 
than 20 sanctions programs that OFAC administers, OFAC penalties for 
Cuba embargo violations represented more than 70 percent of its total 
penalties in 2000-2005, falling to 29 percent in 2006. Most Cuba 
embargo penalties were for infractions such as purchasing Cuban cigars 
and were, on average, smaller than the penalties for violating other 
sanctions. Although OFAC could not provide reliable data showing its 
allocations for Cuba embargo cases versus other sanctions cases, it 
said that the Cuba embargo cases required relatively few resources. In 
contrast to OFAC, BIS and Justice have focused on priorities, such as 
prosecuting violent crimes and penalizing export violations, that 
present a greater threat to public safety and homeland and national 
security. In 2002-2006, reflecting its limited number of embargo- 
related investigations, BIS imposed penalties totaling about $50,000 
for Cuba embargo violations and about $30 million for violations of 
other sanctions. Justice reported that U.S. Attorneys have prosecuted 
few cases involving violations of the Cuba embargo in recent years, in 
part because the U.S. Attorney's Office prefers to focus resources on 
more significant cases involving multiple violations.[Footnote 14] 

U.S. officials and others cited the following key factors as hindering 
agencies' enforcement of the U.S. embargo on Cuba: (1) lack of foreign 
support for, and cooperation with, the embargo; (2) divided U.S. public 
opinion about the embargo, particularly the recent tightening of 
restrictions; (3) the difficulty of detecting some embargo violations; 
and (4) the embargo's complexity and changing rules. In some cases, 
these factors act in concert. 

* Lack of foreign support and cooperation. The unilateral nature of the 
embargo and a lack of multilateral cooperation hamper U.S. agencies' 
diplomatic and enforcement efforts, according to agency officials. For 
example, some governments have actively opposed the U.S. embargo by 
refusing to identify U.S. travelers making unauthorized visits to Cuba 
via third countries, complicating agencies' enforcement activities, or 
have declined to limit their trade, financial, and travel relations 
with Cuba, further undermining the embargo's stated purpose. 

* Divided U.S. public opinion. Agency officials said that divided 
public opinion about the embargo has contributed to widespread, small- 
scale violations of restrictions on family travel and remittances and 
to an environment in which some individuals can profit from illegal 
activities, such as selling fraudulent religious travel licenses. In 
addition, human rights, religious, and other groups have criticized the 
increased restrictions on family travel and remittances; and several of 
these groups have engaged in acts of civil disobedience, such as 
traveling to Cuba without a license. 

* Difficulty of detecting some criminal violations. Agency officials 
said that the difficulty of detecting certain embargo violations 
creates challenges to enforcing the embargo. For instance, Treasury 
licenses and other documents can be duplicated, and no system exists 
for quickly verifying their legitimacy; CBP has identified several 
thousand fraudulent licenses. Also, financial services technologies, 
such as stored-value cards and online money transfer services, and 
widespread money laundering in southern Florida create opportunities 
for transferring funds to Cuba illegally. 

* Complexity and changing rules. Agency officials reported that the 
embargo's complexity and rule changes have created public uncertainty, 
possibly reflected in small-scale violations of, and confusion about, 
rules on travel, cash remittances, and allowable baggage. For example, 
immediately after the travel rule changes in 2004, it was unclear to 
both passengers and CBP officers whether the new 44-pound limit on 
baggage for family travel applied to medical and personal safety items 
such as wheelchairs, crutches, and child safety seats; in 2006, BIS 
clarified that the new limit did not include such items. 

In this report, we recommend that the Secretary of Homeland Security 
direct CBP to re-examine whether the level of resources used for 
secondary inspections of travelers returning from Cuba at Miami 
International Airport effectively balances the agency's 
responsibilities for enforcing the embargo on Cuba and for protecting 
homeland security. We also recommend that the Secretary of the Treasury 
direct OFAC to assess its allocation of resources for investigating and 
penalizing violations of the Cuba embargo with respect to the numerous 
other sanctions programs it administers. 

DHS, Treasury, State, and Commerce provided written comments regarding 
a draft of this report (see apps. VI through IX). DHS said that 
although CBP agreed with the intent of our draft recommendation that 
they use a risk-based approach in allocating resources for secondary 
inspections at the Miami airport, they considered it unwarranted. CBP 
said that it allocated resources at the airport using a risk-based 
approach that reflects the increased risk of embargo violations after 
the 2004 rule changes. Based on additional data provided by CBP 
regarding its risk factors, we revised our report and recommendation. 
Treasury expressed neither agreement nor disagreement with our 
recommendation but stated that OFAC's resources for investigating and 
penalizing violations of the Cuba embargo and other sanctions programs 
are allocated according to the agency's priorities, legal obligations, 
and volume of work. Treasury's comments do not address our finding 
that, since 2000, OFAC has conducted more investigations and imposed 
more penalties for violations of the Cuba embargo than for all of the 
other 20-plus sanctions programs the agency implements. State and 
Commerce expressed neither agreement nor disagreement with our draft 
report. (See "Agency Comments and Our Evaluation" for fuller summaries 
of these comments and our responses.) 

Background: 

Cuba is the largest Caribbean nation, with a population of 11.4 million 
and an area of about 111,000 square kilometers (slightly smaller than 
Pennsylvania). Since Fidel Castro came to power in early 1959, Cuba has 
been a communist state characterized by a one-party political system 
and a centrally planned economy. Per capita nominal gross domestic 
product (GDP) was about $4,100 in 2006,[Footnote 15] and the economy is 
heavily dependent on international tourism, Venezuelan subsidies, and 
exports of natural resources. As we have previously reported, the Cuban 
government routinely violates its citizens' human and political rights, 
controls the media and jams foreign broadcasts, and harasses and 
imprisons independent journalists and political dissidents.[Footnote 
16] 

Key Elements of the U.S. Embargo on Cuba: 

The CACR, the designation of Cuba as a state sponsor of terrorism, 
several laws, and changes in administration policies since mid-2003 are 
key elements of the current U.S. embargo on Cuba. 

* Cuban Assets Control Regulations. In 1963, Treasury issued the CACR, 
which regulate all transactions involving property and services in 
which Cuba or a Cuban national has an interest, including travel, 
remittances, and other financial transactions with Cuba.[Footnote 17] 
After coming to power in 1959, the Cuban government began seizing U.S. 
properties and businesses. The United States responded with 
increasingly tight restrictions on trade with Cuba, culminating in 
President Kennedy's declaration in February 1962 of an almost complete 
embargo on Cuba.[Footnote 18] These rules have been revised many times 
since 1963 to reflect U.S. policy changes with regard to the Cuba 
embargo. For example, OFAC's 1999 amendments to the CACR significantly 
expanded travel licensing. (See app. II for a timeline of key changes 
to the CACR and other events in the evolution of the U.S. embargo on 
Cuba since 1960.) 

* Designation of Cuba as a state sponsor of terrorism. In 1982, the 
United States designated Cuba a state sponsor of terrorism,[Footnote 
19] principally for supporting terrorist groups in Latin America such 
as the M-19 movement in Colombia. Designated state sponsors of 
terrorism are subject to strict export controls, including a ban on the 
export of arms-related technologies and a policy of denial[Footnote 20] 
for dual-use exports.[Footnote 21] Financial transactions with state 
sponsors of terrorism also are restricted, and designated countries are 
ineligible to receive U.S. foreign assistance. Many of these 
restrictions already applied to Cuba under the existing embargo at the 
time of its designation. The current U.S. embargo on Cuba is the most 
comprehensive regime of U.S. sanctions on any country, including the 
other countries designated by the U.S. government to be state sponsors 
of terrorism-- Iran, North Korea, Sudan, and Syria. (See app. III for a 
comparison of U.S. sanctions on Cuba and these countries.) 

* Cuban Democracy Act. In 1992, the President signed the Cuban 
Democracy Act,[Footnote 22] intended to support democracy in Cuba by 
further restricting U.S. trade with the Cuban government and 
encouraging other countries to limit their trade. The law permitted 
U.S. exports of medicine and medical supplies to Cuba, with certain 
exceptions. However, the law required that exporters obtain a specific 
license for such items and that the U.S. government be able to verify 
the items were used for the intended purposes and benefited the Cuban 
people. The law also restricted trade with Cuba by foreign subsidiaries 
of U.S. firms and prohibited any vessel unlicensed by Treasury from (1) 
loading or unloading freight in a U.S. port within 180 days after 
leaving a Cuban port where it engaged in trade of goods or services or 
(2) entering a U.S. port while carrying goods or passengers to or from 
Cuba or goods in which Cuba or a Cuban national had an interest. 

* Helms-Burton Act. In 1996, shortly after Cuban authorities shot down 
an aircraft flown by U.S. citizens, the President signed the Cuban 
Liberty and Democratic Solidarity (LIBERTAD) Act, commonly known as 
the: 

Helms-Burton Act.[Footnote 23] This law codifies the CACR[Footnote 24] 
and allows the President to suspend the embargo only if he determines 
that a transition government is in power in Cuba. The law also permits 
U.S. nationals to sue in U.S. federal court persons trafficking in 
property seized by the Cuban government[Footnote 25] and provides for 
denying entry into the United States to aliens (and their immediate 
families) involved in the trafficking of seized property.[Footnote 26] 

* Trade Sanctions Reform and Export Enhancement Act of 2000. In 2000, 
Congress passed TSRA, which required the President to lift unilateral 
U.S. sanctions on the export of food, agricultural commodities, and 
medical products worldwide and permitted their export to Cuba[Footnote 
27] and other designated state sponsors of terrorism subject to 
licensing.[Footnote 28] The legislation was introduced in Congress 
after lobbying by farm groups and agribusiness firms affected by 
declining agricultural exports and lower commodity prices in the late 
1990s. 

* Administration policy. Since mid-2003, the administration has taken 
actions, and plans to take additional actions, to tighten the embargo 
on Cuba.[Footnote 29] In October 2003, the President directed DHS to 
(1) strengthen enforcement of the embargo by increasing inspections of 
travelers and shipments to and from Cuba and (2) target those who 
travel illegally to Cuba via third countries or on private vessels. In 
May 2004, the President announced new measures to tighten the embargo 
based on recommendations of the Commission for Assistance to a Free 
Cuba.[Footnote 30] The President had established CAFC in October 2003 
to identify (1) ways the U.S. government could hasten the end of the 
Castro dictatorship and (2) U.S. programs to assist the Cuban people 
during a transition to democracy. The commission has issued two 
reports, in May 2004 and July 2006, respectively, which included about 
40 recommendations to tighten the embargo.[Footnote 31] To date, the 
administration has implemented, or partly implemented, about half of 
these recommendations and plans to implement the rest. Additionally, 
the administration is exploring ways to tighten the embargo further. 
One interagency working group is considering ways to restrict Cuban 
officials' assets abroad and another is exploring ways to limit Cuba's 
nickel exports.[Footnote 32] 

* 2004 CAFC report. The report concluded that hard currency provided by 
U.S. travelers' spending and U.S. residents' remittances and gifts 
contribute to keeping the Cuban government in power. The Cuban 
government captures a percentage of travelers' spending through state- 
run airlines, state-run stores, and customs duties. Most U.S. travelers 
go to Cuba to visit family; however, the CAFC report found that some 
travelers using educational travel licenses engage in tourist 
activities, thereby spending money on the island without participating 
in the kind of meaningful exchanges with the Cuban people that these 
licenses are designed to encourage. According to the report, the Cuban 
government profits from U.S. remittances through inflated fees for 
currency exchange and state-run stores where products are sold for hard 
currency. The report contained recommendations to tighten the embargo 
and prepare U.S. agencies to assist the Cuban people in a transition to 
democracy. For example, the report recommended restrictions on the 
frequency and duration of family visits and suggested new limits on 
recipients eligible for remittances. 

* 2006 CAFC report. This report followed up on the findings of the 2004 
report and described changes in Cuba since the original report. The 
embargo-related recommendations of the 2006 report are primarily 
focused on stricter enforcement of the embargo. For example, the report 
recommends increased enforcement of the Helms-Burton Act, greater 
controls on medical equipment exported to Cuba, and the establishment 

of several task forces to identify new ways to deny hard currency to 
the Cuban government. 

U.S. Agencies' Activities in Enforcing the Cuba Embargo: 

The U.S. agencies enforcing the embargo on Cuba conduct four general 
types of activities: (1) licensing trade, travel, and financial 
transactions; (2) inspecting travelers and exports and auditing firms 
licensed to provide travel and financial services; (3) investigating 
suspected embargo violations; and (4) imposing civil fines or penalties 
on, or prosecuting, violators. Table 1 summarizes the activities 
undertaken by these agencies in enforcing the embargo. In addition, 
State is responsible for providing overall foreign policy guidance on 
licensing decisions and for obtaining international cooperation for 
U.S. agencies enforcing the embargo as well as support for the U.S. 
strategy of denying the Cuban regime hard currency resources in the 
pursuit of broad U.S. foreign policy goals, such as encouraging 
political and human rights. 

Table 1: U.S. Agencies' Cuba Embargo Enforcement Activities: 

Type of activity: Licensing; 
Department (agency): Treasury; 
(OFAC); 
Embargo-related activities: OFAC regulates and licenses (1) travel by 
family members, religious organizations, authorized trade missions, and 
a wide range of others; (2) humanitarian assistance; 
(3) educational, research and journalistic activities; (4) financial 
transactions involving Cuban assets; (5) imports from Cuba; 
and (6) travel and financial service providers. OFAC licenses U.S. 
residents' financial transactions involving Cuba, such as accessing 
estates, insurance policies, and security deposits boxes as well as 
other banking transactions. OFAC's Miami field office processes (1) 
licenses for family travel and (2) authorizations for Cuba travel, 
carrier, and remittance-forwarding service providers. OFAC headquarters 
processes all other licenses. 

Type of activity: Licensing; 
Department (agency): Commerce: (BIS); Embargo-related activities: BIS 
regulates and licenses commercial exports and re-exports to Cuba of 
agricultural commodities, nonagricultural products such as medical 
equipment and supplies, and humanitarian donations and gift parcels. 

Type of activity: Licensing; 
Department (agency): State, Defense, and other agencies; Embargo-
related activities: State, Defense, and other agencies, as appropriate, 
assist Treasury and Commerce in licensing decisions that pose unusual 
travel, financial, and trade- related license issues or foreign policy 
concerns; State provides overall foreign policy guidance on Cuba 
licensing decisions. 

Type of activity: Licensing; 
Department (agency): DHS: (U.S. Coast Guard); Embargo-related 
activities: U.S. Coast Guard's 7th District in Miami issues permits for 
vessels to travel to Cuba. Applicants must meet Commerce and Treasury 
licensing requirements. 

Type of activity: Inspections and audits; Department (agency): 
Treasury: (OFAC); Embargo-related activities: OFAC's Miami field office 
participates with OFAC headquarters in conducting audits and other 
reviews of licensed travel and financial service providers, who are 
required by regulation to maintain records of their Cuba-related 
transactions. 

Type of activity: Inspections and audits; Department (agency): DHS: 
(CBP); 
Embargo-related activities: CBP inspects exports and passengers to and 
from Cuba and refers suspected embargo violations to OFAC, BIS/OEE, or 
ICE, as appropriate; CBP inspects all passengers arriving from Cuba at 
Miami International Airport. Currently this is the only U.S. airport 
with regular, direct service to Cuba. Since December 2006, JFK 
International Airport in New York has hosted an average of two to three 
charter flights to Cuba per month; At other U.S. airports, CBP screens 
passengers on international flights for compliance with applicable U.S. 
laws and regulations, including embargo travel, trade, and agricultural 
restrictions; CBP's automated systems flag all U.S. shipments to Cuba 
for screening. 

Type of activity: Investigations; 
Department (agency): Treasury: (OFAC); 
Embargo-related activities: OFAC investigates suspected embargo 
violations referred by other agencies, detected by OFAC enforcement 
activities, or self-reported by violators; One investigator in OFAC's 
Miami field office supports CBP inspections and ICE and other agencies' 
investigations. 

Type of activity: Investigations; 
Department (agency): Commerce: (BIS/OEE); 
Embargo- related activities: BIS/OEE investigates suspected embargo 
violations referred by other agencies, detected by BIS enforcement 
activities, or self-reported by violators; BIS/OEE has regional field 
offices in eight cities, including Ft. Lauderdale, Florida, and one 
regional suboffice. 

Type of activity: Investigations; 
Department (agency): DHS: (ICE); 
Embargo-related activities: Penalties and prosecutions: ICE 
investigates Cuba embargo-related cases referred by CBP or other 
agencies or detected by ICE enforcement activities. 

Type of activity: Penalties and prosecutions; 
Department (agency): Treasury: (OFAC); Embargo-related activities: OFAC 
imposes civil fines and penalties for embargo violations. 

Type of activity: Penalties and prosecutions; 
Department (agency): Commerce: (BIS); 
Embargo-related activities: BIS imposes fines and penalties for embargo 
violations. 

Type of activity: Penalties and prosecutions; 
Department (agency): Justice: (U.S. Attorneys Offices); 
Embargo-related activities: U.S. Attorneys prosecute criminal 
violations of the Cuba embargo or related crimes; U.S. Attorneys 
Offices in Miami, Houston, and Philadelphia have prosecuted embargo 
cases, according to Justice; The U.S. Attorney's Office in Miami leads 
the Cuban Sanctions Enforcement Task Force, established in October 2006 
as recommended by CAFC. The task force includes representatives from 
BIS/OEE, CBP, ICE, OFAC, and the U.S. Coast Guard. 

Source: GAO analysis of department records and interviews with 
department officials. 

Notes: 

BIS = Bureau of Industry and Security: 
CBP = U.S. Customs and Border Protection: 
CAFC = Commission for Assistance for a Free Cuba: 
DHS = Department of Homeland Security: 
ICE = U.S. Immigration and Customs Enforcement: 
OEE = Office of Export Enforcement: 
OFAC = Office of Foreign Assets Control: 

[End of table] 

The agencies carry out these Cuba embargo-related activities in the 
context of their broader responsibilities for homeland security, law 
enforcement, national security, foreign policy, and international trade 
(see table 2). Since the September 2001 terrorist attacks on the United 
States, the agencies' homeland security-related responsibilities--such 
as stopping terrorists and illegal immigration, enhancing port 
security, and interrupting drug and terrorist money laundering--have 
increased dramatically, and the agencies are expected to manage these 
responsibilities on the basis of assessed risk of terrorism and other 
threats.[Footnote 33] Managing homeland security efforts on the basis 
of risk has received widespread support from Congress, the President, 
senior agency officials,and others as a way to allocate limited 
resources effectively.[Footnote 34] In particular, the National 
Strategy for Homeland Security[Footnote 35] and DHS's strategic 
plan[Footnote 36] have called for the use of risk-based decisions to 
target DHS resources to priority threats and vulnerabilities.[Footnote 
37] As we have previously reported, risk management is a function of 
threat, vulnerabilities, and consequences. The consequences of a 
terrorist attack, for example, may include loss of human lives, 
economic costs, and the adverse impact on national security. Another 
closely related consideration is the criticality (relative importance) 
of the assets at risk.[Footnote 38] 

Table 2: Key Agency Missions and Priorities: 

Agency: OFAC; 
Mission and priorities: Treasury's OFAC administers and enforces more 
than 20 economic and trade sanctions programs based on U.S. foreign 
policy and national security goals against targeted foreign countries, 
terrorists, international narcotics traffickers, and those engaged in 
activities related to the proliferation of weapons of mass destruction. 
OFAC acts under presidential wartime and national emergency powers, as 
well as authority granted by specific legislation, to impose controls 
on transactions and freeze foreign assets under U.S. jurisdiction. Many 
of the sanctions are based on United Nations and other international 
mandates, are multilateral in scope, and involve cooperation with 
allied governments. 

OFAC is a component of Treasury's Office of Terrorism and Financial 
Intelligence, which marshals the department's intelligence and 
enforcement functions with the twin aims of safeguarding the financial 
system against illicit use and combating rogue nations, terrorist 
facilitators, weapons of mass destruction proliferators, money 
launderers, drug kingpins, and other national security threats. 

Agency: BIS; 
Mission and priorities: Within Commerce, BIS's mission is to advance 
U.S. national security, foreign policy, and economic objectives by 
ensuring an effective export control and treaty compliance system and 
promoting continued U.S. strategic technology leadership. BIS's 
paramount concern and mission is protecting the security of the United 
States, which BIS says includes U.S. national security, economic 
security, cyber security, and homeland security. 

Within BIS, the Office of Export Enforcement's priorities emphasize 
investigating potential violations of dual-use exports related to 
weapons of mass destruction, terrorism, and unauthorized military end 
use. BIS/OEE's eight regional offices and one regional suboffice are 
responsible for conducting investigations in multiple states. 

Agency: CBP; 
Mission and priorities: CBP is the lead federal agency charged with 
keeping terrorists, criminals, and inadmissible aliens out of the 
country while facilitating the flow of legitimate travel and commerce 
at the nation's borders, and it devotes most of its resources to 
inspecting items and persons entering the country. CBP's top priority 
since the terrorist attacks of September 2001 is keeping terrorists and 
terrorist weapons out of the country. 

CBP reports that it assesses all passengers flying into the U.S. from 
abroad for terrorist risk using several automated systems to identify 
people who may pose a risk. CBP regularly refuses entry to people who 
may pose a threat to U.S. security. For items leaving the United 
States, CBP uses an automated targeting system to identify exports for 
examination by its officers. 

CBP operates 326 official ports of entry composed of airports, 
seaports, and designated land ports of entry along the northern and 
southern borders. CBP also has preclearance operations at 15 
international ports in Aruba, Bahamas, Bermuda, Canada, and Ireland, 
where travelers are processed for advance approval to enter the United 
States prior to departure from the respective airport. CBP annually 
processes over 400 million passenger and pedestrian entries,[A] 20 
million containers, and 130 million conveyances[B] through ports of 
entry. 

Agency: ICE; 
Mission and priorities: The largest investigative branch within DHS, 
ICE is responsible for eliminating vulnerabilities in the nation's 
border, and with economic, transportation, and infrastructure security. 
ICE investigates drug smuggling, human trafficking and smuggling, 
financial crimes, commercial fraud, document fraud, money laundering, 
child exploitation, immigration fraud, and export violations. 

According to the agency's fiscal year 2006 annual report, ICE's mission 
is to protect America and uphold public safety by targeting the people, 
money, and materials that support terrorist and criminal activities. 
ICE fulfills this mission by identifying criminal activities and 
eliminating vulnerabilities that pose a threat to the nation's borders, 
as well as enforcing economic, transportation, and infrastructure 
security. By doing so, ICE seeks to eliminate the potential threat of 
terrorist acts against the United States. Since the terrorist attacks 
of September 2001, ICE's priority mission has been protecting the 
homeland from future terrorist attacks. 

Agency: U.S. Coast Guard; 
Mission and priorities: The Coast Guard is a military, maritime service 
within DHS and one of the nation's five armed services. Its core roles 
are to protect the public, the environment, and U.S. economic and 
security interests in any maritime region in which those interests may 
be at risk, including international waters and America's coasts, ports, 
and inland waterways. The Coast Guard has five fundamental roles: 
maritime safety, maritime security, maritime mobility, national 
defense, and protection of natural resources. 

Within its maritime security role, the Coast Guard's mission is to 
protect America's maritime borders from all intrusions by: (a) halting 
the flow of illegal drugs, aliens, and contraband into the United 
States through maritime routes; (b) preventing illegal fishing; and (c) 
suppressing violations of federal law in the maritime arena. 

Agency: U.S. Attorneys; 
Mission and priorities: Within the Department of Justice, U.S. 
Attorneys have many competing priorities, including prosecuting cases 
involving terrorism, counterterrorism, and government contractor fraud. 
U.S. Attorneys serve as the nation's principal litigators under the 
direction of the Attorney General. There are 93 United States Attorneys 
stationed throughout the United States, Puerto Rico, the Virgin 
Islands, Guam, and the Northern Mariana Islands. U.S. Attorneys are 
appointed by, and serve at the discretion of, the President of the 
United States, with advice and consent of the United States Senate. 
Each United States Attorney is the chief federal law enforcement 
officer of the United States within his or her particular jurisdiction. 

U.S. Attorneys conduct most of the trial work in which the United 
States is a party. The United States Attorneys have three statutory 
responsibilities under Title 28, Section 547 of the United States Code; 

* Prosecution of criminal cases brought by the Federal government; 

* Prosecution and defense of civil cases in which the United States is 
a party; 

* Collection of debts owed the Federal government, which are 
administratively uncollectible. 

Source: GAO analysis of agency records and websites, prior GAO reports, 
and other records. 

[A] These statistics represent the total number of crossings, but do 
not reflect the number of unique individuals that entered the country. 
For example, a person may enter the country on multiple occasions 
throughout the year, and CBP counts each separate entry by the same 
person as an additional traveler processed. 

[B] "Conveyance" refers to the means of transport by which persons or 
goods enter the country, such as by vehicle, aircraft, truck, or 
vessel.) 

[End of table] 

Loosening Embargo Led to Increased U.S. Exports, but Impact of Tighter 
Restrictions on Travel, Remittances, and Gifts Is Unknown: 

U.S. agencies' loosening of the embargo rules on some U.S. exports in 
2001 led to increased commercial agricultural shipments to Cuba. The 
impact of tighter restrictions implemented in 2004 and 2005 on travel, 
cash remittances, and gifts to Cuba cannot be determined because of an 
absence of reliable data. 

Embargo Rules for Exports, Travel, Remittances, and Gifts Changed in 
2001-2005: 

In 2001, Commerce and Treasury issued rule changes to implement TSRA, 
loosening restrictions on some commercial exports to Cuba. In 2004- 
2005, OFAC increased restrictions on travel, remittances, and other 
transactions to Cuba, as recommended by CAFC, and in 2005 clarified 
that embargo rules require exporters to receive payment from Cuba 
before shipments leave U.S. ports or finance their transactions through 
third-country banks. 

Restrictions on Some Commercial Exports Loosened in 2001, but Payment 
Rules Tightened in 2005: 

In mid-2001, BIS and OFAC issued rule changes to implement TSRA, which 
required the President to lift unilateral U.S. sanctions on the 
commercial export of agricultural products, medicines, and medical 
equipment to Cuban government importers. 

* BIS. As required by TSRA, BIS introduced new procedures to streamline 
processing of export license applications for TSRA-eligible items for 
Cuba.[Footnote 39] Under this streamlined licensing process, an 
exporter must submit prior notification of a proposed transaction to 
BIS. The exporter may proceed with the shipment when BIS confirms that 
no reviewing agency has raised an objection (generally within 12 
business days), provided the transaction meets all of the other 
requirements of the license exception.[Footnote 40] This review 
includes the screening of the ultimate recipient of the commodities to 
ensure it is not involved in promoting international terrorism. Prior 
to these changes, most U.S. exports to Cuba were prohibited and the few 
permitted exports were licensed on a case-by-case basis. Under the TSRA-
related changes, agricultural exports--such as food, feed, fish, 
drinks, livestock, fiber, tobacco, wood products, and seeds--may be 
approved through the expedited licensing process.[Footnote 41] Exports 
of medicines and medical devices to Cuba, however, continue to be 
subject to the licensing requirements established in the Cuban 
Democracy Act.[Footnote 42] 

* OFAC. Reflecting TSRA, the new rules required that Cuban payments for 
U.S. exports be in the form of cash in advance or financed through a 
third-country bank. OFAC also clarified that Commerce licenses covered 
re-exports of items covered by TSRA and that vessels could re-enter 
U.S. ports within 180 days after carrying authorized exports to Cuba 
notwithstanding the restrictions contained in the Cuban Democracy 
Act.[Footnote 43] Representatives of agricultural and medical producers 
and sellers, port authorities, state government agricultural agencies, 
and U.S. producer and industry associations may travel to Cuba with a 
Treasury (OFAC) license. Cuban officials may travel to the United 
States under a general OFAC license provided State has granted them a 
visa. Under the rules, travel transactions related to marketing, sales 
negotiation, accompanied delivery, and servicing of exports are 
possible with a specific Treasury license.[Footnote 44] 

In 2005, OFAC clarified that cash-in-advance payment means the U.S. 
seller or seller's agent must receive payment from Cuba before the 
shipment departs from the port where it was loaded.[Footnote 45] 
Previously, sellers had interpreted cash-in-advance payment to mean 
that payment could be received any time before delivery of goods to 
Cuba (i.e., while the shipment was in transit to Cuba). Table 3 
summarizes key BIS and OFAC rule changes implementing TSRA. 

Table 3: Trade and Related Rule Changes Implementing TSRA: 

Embargo rules in effect at time of 2001 changes: Trade: 
* U.S. exports to Cuba requiring a license, including agricultural 
products, are subject to a policy of denial; Embargo rules in effect 
after 2001 changes: Trade: 
* Exports of TSRA-eligible agricultural products to Cuba permitted with 
a license; 
* Other U.S. exports to Cuba requiring a license remain subject to a 
policy of denial. 

Embargo rules in effect at time of 2001 changes: Trade: 
* Some medical exports permitted under the Cuban Democracy Act, subject 
to standard export licensing process; Embargo rules in effect after 
2001 changes: Trade: 
* No change. 

Embargo rules in effect at time of 2001 changes: Trade: 
* No imports of Cuban products, except for informational materials and 
some artwork, unless specifically authorized by Treasury; Embargo rules 
in effect after 2001 changes: Trade: 
* No change. 

Embargo rules in effect at time of 2001 changes: Trade-related travel 
and financial transactions: 
* Certain financial transactions authorized provided underlying exports 
are authorized; Embargo rules in effect after 2001 changes: Trade-
related travel and financial transactions: 
* Seller or seller's agent may receive payment for exports to Cuba 
licensed under TSRA via third country banks or cash in advance.[A]. 

Embargo rules in effect at time of 2001 changes: Trade-related travel 
and financial transactions: 
* Travel transactions related to marketing, sales negotiation, 
accompanied delivery, and servicing of any licensed exports are 
permitted with a Treasury license; Embargo rules in effect after 2001 
changes: Trade-related travel and financial transactions: 
* No change. 

Source: GAO analysis of Commerce regulations, CACR, the Federal 
Register, Code of Federal Regulations, and other records. 

[A] In 2005, OFAC clarified that "cash in advance" means the U.S. 
seller or seller's agent must receive payment from Cuba before the 
shipment departs the port where it was loaded. See 70 Federal Register 
9225 (codified in 31 C.F.R. ï¿½ 515.533). 

[End of table] 

More Restrictive Rules for Travel, Remittances, and Gifts Introduced in 
2004-2005: 

In response to the administration's policy of tightening the embargo, 
OFAC implemented substantial new restrictions on travel, remittances, 
and gift parcels.[Footnote 46] 

* Travel. In 2004, as recommended by CAFC, OFAC tightened restrictions 
on family, educational, religious, and other travel. New regulations 
reduced the frequency of family visits from once every 12 months to 
once every 3 years; narrowed the category of relatives eligible for 
such visits; reduced the allowed per diem--the amount of money that 
family travelers could spend per day--from $167[Footnote 47] to $50; 
required that all family travelers obtain specific Treasury 
licenses;[Footnote 48] and eliminated the specific license authorizing 
additional family visits to Cuba in cases of humanitarian 
need.[Footnote 49] Changes to the CACR for educational travel 
eliminated licenses for certain activities by secondary schools; 
limited students and professors eligible to travel under an academic 
institution's license to those enrolled or employed on a full-time, 
permanent basis; and required that certain licensed educational 
activities (programs) be no shorter than 10 weeks. In 2005, OFAC 
announced that, owing to an increase in cases of suspected religious 
license abuse, some religious groups would be required to apply for a 
more restricted license. Under this restricted license, religious 
organizations made up of multiple congregations, such as national 
religious denominations, are limited to 4 trips annually, with 25 
travelers per trip, and must submit travelers' names to OFAC prior to 
travel. The 2004 rule changes also eliminated the provision that 
allowed authorized travelers to import up to $100 worth of Cuban goods 
for personal consumption, with the exception of informational materials 
such as publications and artwork. Additionally, a BIS rule change 
limited authorized travelers to Cuba to no more than 44 pounds of 
baggage.[Footnote 50] Table 4 summarizes key changes for family, 
educational, and religious travel. 

Table 4: Restrictions on Family, Educational, and Religious Travel 
before and after 2004-2005: 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* Visits to relatives within three degrees of relationship (extended 
family including cousins); Embargo rules in effect after 2004-2005 
changes: Family Travel: 
* Visits to relatives within one degree of relationship (grandparent, 
grandchild, parent, sibling, spouse, or child). 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* Unlimited length of stay; 
Embargo rules in effect after 2004-2005 changes: Family Travel: 
* Length of stay limited to 14 days. 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* One authorized visit per 12-month period; Embargo rules in effect 
after 2004-2005 changes: Family Travel: 
* One authorized visit per 3-year period. 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* Family travel conducted under a general license (i.e., family 
travelers do not have to apply for a specific Treasury license); 
Embargo rules in effect after 2004-2005 changes: Family Travel: 
* All family travel specifically licensed (i.e., all family travelers 
must apply for licenses prior to travel to Cuba). 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* Per diem for family travel is $167.[A]; Embargo rules in effect after 
2004-2005 changes: Family Travel: 
* Per diem for family travel reduced to $50. 

Embargo rules in effect at time of 2004-2005 changes: Family Travel: 
* Specific license available for additional family visits in a 12-month 
period; Embargo rules in effect after 2004-2005 changes: Family Travel: 
* No license available for additional family visits in any 3-year 
period. 

Embargo rules in effect at time of 2004-2005 changes: Educational 
travel: 
* Secondary institutions eligible for license; Embargo rules in effect 
after 2004- 2005 changes: Educational travel: 
* Only undergraduate, graduate institutions eligible for license. 

Embargo rules in effect at time of 2004-2005 changes: Educational 
travel: 
* No minimum length of stay; 
Embargo rules in effect after 2004-2005 changes: Educational travel: 
* Ten-week minimum length of program for certain education activities. 

Embargo rules in effect at time of 2004-2005 changes: Educational 
travel: 
* Students from nonlicensed institutions may travel to Cuba through 
programs offered by licensed institutions; Embargo rules in effect 
after 2004-2005 changes: Educational travel: 
* Students must be enrolled at licensed institution to travel to Cuba. 

Embargo rules in effect at time of 2004-2005 changes: Educational 
travel: 
* License valid for 2 years; 
Embargo rules in effect after 2004-2005 changes: Educational travel: 
* License valid for 1 year. 

Embargo rules in effect at time of 2004-2005 changes: Religious travel: 
* Religious organizations can make unlimited trips to Cuba; no limits 
on the number of travelers; Embargo rules in effect after 2004-2005 
changes: Religious travel: * Religious organizations made up of 
multiple congregations limited to 4 trips per year, 25 travelers per 
trip; 
* Single congregation religious organizations unaffected. 

Embargo rules in effect at time of 2004-2005 changes: All travel: 
* No weight limit for baggage to Cuba; Embargo rules in effect after 
2004-2005 changes: All travel: 
* Travelers limited to 44 lbs of baggage; no extra baggage allowance 
for family travelers. 

Embargo rules in effect at time of 2004-2005 changes: All travel: 
* Travelers may import up to $100 of Cuban products for personal 
consumption; Embargo rules in effect after 2004-2005 changes: All 
travel: 
* Travelers may not import any Cuban products, with the exception of 
informational materials such as publications and artwork. 

Source: GAO analysis of CACR, the Federal Register, the Code of Federal 
Regulations, CAFC recommendations, and other records. 

[A] Regulations provided for a daily spending (living expenses) limit 
for family travel not to exceed the "maximum per diem rate" for 
government travel to Havana, Cuba, as published by the State Department 
for the period that the family travel took place. At the time of the 
changes, the published per diem rate was $167. See 31 C.F.R. ï¿½ 515.560 
(2003). 

[End of table] 

* Cash remittances and gifts. In mid-2004, OFAC and BIS began 
implementing new restrictions on remittances and gift parcels. The OFAC 
rule changes narrowed the category of recipients of cash remittances to 
the sender's immediate family and expanded the ban on remittance 
recipients to certain senior Cuban government and Communist Party 
officials. The changes also substantially reduced the value of 
remittances that licensed travelers could carry to Cuba--from $3,000 to 
$300.[Footnote 51] BIS rule changes also narrowed the category of 
recipients eligible to receive gift parcels and limited the contents of 
such parcels.[Footnote 52] Table 5 summarizes key rule changes for 
remittances and gift parcels. 

Table 5: Restrictions on Remittances and Gift Parcels to Cuba before 
and after 2004 Embargo Rule Changes: 

Embargo rules in effect at time of 2004 changes: Remittances: 
* Remittances are permitted to any household in Cuba; Embargo rules in 
effect after 2004 changes: Remittances: 
* Remittances are permitted to immediate family members only 
(grandparent, grandchild, parent, sibling, spouse, or child). 

Embargo rules in effect at time of 2004 changes: Remittances: 
* Authorized travelers may carry up to $3,000 in remittances to Cuba; 
Embargo rules in effect after 2004 changes: Remittances: 
* Authorized travelers may carry up to $300 in remittances to Cuba. 

Embargo rules in effect at time of 2004 changes: Remittances: 
* No senior Cuban government or Communist Party officials may receive 
remittances; Embargo rules in effect after 2004 changes: Remittances: 
* Expanded ban on remittances to certain senior Cuban government and 
Communist Party officials. 

Embargo rules in effect at time of 2004 changes: Remittances: 
* Nondepository institutions[A] must have specific Treasury license to 
forward remittances; Embargo rules in effect after 2004 changes: 
Remittances: 
* All depository and nondepository institutions[A] must have a specific 
Treasury license to forward remittances. 

Embargo rules in effect at time of 2004 changes: Gifts: 
* Gift parcels may be sent to individuals or religious, charitable, or 
educational organizations in Cuba; Embargo rules in effect after 2004 
changes: Gifts: 
* Gift parcels may be sent to immediate family only; cannot be sent to 
certain Cuban government or Communist Party officials. 

Embargo rules in effect at time of 2004 changes: Gifts: 
* One gift parcel may be sent per month from the same sender to the 
same recipient; Embargo rules in effect after 2004 changes: Gifts: 
* One gift parcel may be sent per month per household in Cuba (other 
than food). 

Embargo rules in effect at time of 2004 changes: Gifts: 
* Gift parcel may contain food, seeds, clothing, personal hygiene 
items, veterinary medicines and supplies, fishing equipment and 
supplies, soap-making equipment, vitamins, medicine, medical supplies 
and devices, hospital supplies and equipment, equipment for the 
handicapped, receive-only radios, and batteries for such equipment; 
Embargo rules in effect after 2004 changes: Gifts: 
* Gift parcel contents limited to food, medicine, medical supplies and 
equipment, including hospital supplies and equipment and equipment for 
the handicapped, receive-only radios, and batteries for such equipment. 

Source: GAO analysis of CACR, the Federal Register, the Code of Federal 
Regulations, CAFC recommendations, and other records. 

[A] Depository institutions are financial institutions in United 
States, such as savings banks, that are legally allowed to accept 
monetary deposits from consumers. Nondepository institutions, such as 
Western Union, can conduct certain financial transactions but are not 
allowed to accept monetary deposits from consumers. 

[End of table] 

Embargo Changes Led to Increased Agricultural Exports, but Impact on 
Travel, Remittances, and Gifts Is Unknown: 

Agricultural exports to Cuba rose substantially after TSRA-related 
rules changes were implemented in mid-2001 before declining somewhat in 
2005-2006. Medical exports are limited because they remain subject to 
other statutory restrictions. However, the impact of tighter 
restrictions on travel, remittances, and gifts to Cuba implemented in 
2004-2005 cannot be determined, because reliable data are not 
available. As a result, U.S. officials do not know whether the rule 
changes have reduced the hard currency available to the Castro regime 
as intended. 

U.S. Agricultural Exports to Cuba Rose Dramatically after TSRA Rule 
Changes: 

From 2000 through 2006, total U.S. exports to Cuba rose from $6 million 
to nearly $350 million per year, according to U.S. Census Bureau and 
U.S. Department of Agriculture data. U.S. agricultural exports to Cuba 
over the 7 years totaled more than $1.5 billion.[Footnote 53] In 2000, 
U.S. exports to Cuba consisted mostly of donated items, electric 
machinery, and cereals. After Cuba began importing U.S. agricultural 
products in late 2001, exports to the island jumped to $144 million and 
increased to about $400 million by 2004, making the United States the 
largest exporter of food to the island and Cuba's fourth-largest 
trading partner.[Footnote 54] However, U.S. agricultural exports to 
Cuba declined after 2004. (See fig. 1.) According to U.S. exporters, 
OFAC's 2005 clarification of the cash-in-advance payment 
requirement[Footnote 55] caused delays in shipping and contributed to 
the observed decline in sales to Cuba after 2004.[Footnote 56] Some 
smaller U.S. exporters also have complained that OFAC's licensing 
process has hindered sales to Cuba;[Footnote 57] however, OFAC 
officials said that the majority of TSRA-related license applications 
were approved in 2 to 3 weeks. In addition, some exporters have 
complained that Cuban purchasing officials are routinely denied visas 
to travel to the United States or receive visas valid for such a short 
period as to render them useless.[Footnote 58] 

Figure 1: Cuban Agricultural Imports from the United States and Other 
Countries, 2000-2006: 

This figure is a shaded bar chart showing Cuban agricultural imports 
from the United States and other countries. One shade represents "All 
other countries," and the other represents "United States." The X axis 
is the year, and the Y axis is the dollars (in millions.) 

[See PDF for image] 

Source: GAO analysis of U.S. Census Bureau, U.S. Department of 
Agriculture, and other data. 

[End of figure] 

In contrast to U.S. agricultural exports, U.S. commercial exports of 
medical products to Cuba did not increase substantially in 2000-2006 
and constitute a minor part of U.S. exports to the island. In 2006, for 
example, medical and pharmaceutical products comprised only 0.04 
percent of authorized U.S. commercial exports to Cuba, whereas 
agricultural products made up 98 percent of the total (see table 
6).[Footnote 59] As previously discussed, commercial exports of medical 
products continue to be subject to the restrictions established in the 
Cuban Democracy Act and are licensed through BIS's standard licensing 
process. According to State officials, the current Cuban government 
restrictions on travel outside of Havana by U.S. officials make it 
difficult to conduct onsite inspections of Cuban facilities where the 
U.S. medical exports are used. As a result, U.S. officials have been 
unable to ensure that the exported products are used as intended and 
benefit the Cuban people.[Footnote 60] 

Table 6: Composition of U.S. Exports to Cuba in 2006: 

Type of export: Medicinal and pharmaceutical products; Agricultural 
exports to Cuba: Value ($ millions): --; Agricultural exports to Cuba: 
Percentage of total exports: --; All exports to Cuba: Value ($ 
millions): 0.12; All exports to Cuba: Percentage of total exports: 
0.04. 

Type of export: Other nonagricultural products[A]; Agricultural exports 
to Cuba: Value ($ millions): --; Agricultural exports to Cuba: 
Percentage of total exports: --; All exports to Cuba: Value ($ 
millions): 6.90; All exports to Cuba: Percentage of total exports: 
1.98. 

Type of export: Agricultural products; Agricultural exports to Cuba: 
Value ($ millions): --; Agricultural exports to Cuba: Percentage of 
total exports: --; All exports to Cuba: Value ($ millions): 340.75; All 
exports to Cuba: Percentage of total exports: 97.98. 

Type of export: Cereals; 
Agricultural exports to Cuba: Value ($ millions): 136.36; Agricultural 
exports to Cuba: Percentage of total exports: 39.21; All exports to 
Cuba: Value ($ millions): --; All exports to Cuba: Percentage of total 
exports: --. 

Type of export: Oils, fats, and sugars; Agricultural exports to Cuba: 
Value ($ millions): 61.29; Agricultural exports to Cuba: Percentage of 
total exports: 17.62; All exports to Cuba: Value ($ millions): --; All 
exports to Cuba: Percentage of total exports: --. 

Type of export: Meat and fish; 
Agricultural exports to Cuba: Value ($ millions): 58.99; Agricultural 
exports to Cuba: Percentage of total exports: 16.96; All exports to 
Cuba: Value ($ millions):--; All exports to Cuba: Percentage of total 
exports: --. 

Type of export: Animal feed; 
Agricultural exports to Cuba: Value ($ millions): 35.09; Agricultural 
exports to Cuba: Percentage of total exports: 10.09; All exports to 
Cuba: Value ($ millions): --; All exports to Cuba: Percentage of total 
exports: --. 

Type of export: Vegetables and fruit; Agricultural exports to Cuba: 
Value ($ millions): 21.83; Agricultural exports to Cuba: Percentage of 
total exports: 6.28; All exports to Cuba: Value ($ millions): --; All 
exports to Cuba: Percentage of total exports: --. 

Type of export: Nonedible agricultural[B]; Agricultural exports to 
Cuba: Value ($ millions): 13.49; Agricultural exports to Cuba: 
Percentage of total exports: 3.88; All exports to Cuba: Value ($ 
millions): --; All exports to Cuba: Percentage of total exports: --. 

Type of export: Dairy; 
Agricultural exports to Cuba: Value ($ millions): 12.57; Agricultural 
exports to Cuba: Percentage of total exports: 3.61; All exports to 
Cuba: Value ($ millions): --; All exports to Cuba: Percentage of total 
exports: --. 

Type of export: Miscellaneous edible; Agricultural exports to Cuba: 
Value ($ millions): 1.05; Agricultural exports to Cuba: Percentage of 
total exports: 0.30; All exports to Cuba: Value ($ millions): --; All 
exports to Cuba: Percentage of total exports: --. 

Type of export: Beverages; 
Agricultural exports to Cuba: Value ($ millions): 0.08; Agricultural 
exports to Cuba: Percentage of total exports: 0.02; All exports to 
Cuba: Value ($ millions): --; All exports to Cuba: Percentage of total 
exports: --. 

Total; 
Agricultural exports to Cuba: Value ($ millions): 340.75; Agricultural 
exports to Cuba: Percentage of total exports: 97.98; All exports to 
Cuba: Value ($ millions): 347.78; All exports to Cuba: Percentage of 
total exports: 100.00. 

Source: GAO analysis of U.S. Census Bureau and U.S. Department of 
Agriculture data. 

[A] Other nonagricultural products include humanitarian items approved 
on a case-by-case basis, which were eligible for export to Cuba prior 
to TSRA. Agency officials estimate that licensed humanitarian items 
include donated medicines and medical products. 

[B] Nonedible agricultural products include cork; wood; fertilizers; 
paper; paperboard; textile fibers and yarn; fabrics; dyeing, tanning, 
and coloring materials; and rubber manufactures. 

[End of table] 

Impact of New Restrictions on Travel, Remittances, and Gifts Is 
Unknown: 

Because reliable data are not available, agencies cannot determine the 
impact of the 2004-2005 rule changes on the amount of travel to Cuba 
and on the value of cash remittances and gift parcels sent to Cuba. 
Data on travel to Cuba are incomplete and cover different populations; 
moreover, estimates of the value of remittances and gift parcels vary 
greatly, and U.S. agencies have not tracked remittances or gift parcel 
shipments over time. As a result, U.S. officials cannot reliably 
determine whether the 2004-2005 rule changes have reduced the amount of 
hard currency available to the Cuban government as intended. 

* Travel. No reliable estimates of total U.S. travel to Cuba exist, 
because U.S. and Cuban government data are incomplete and cover 
different populations. 

- The number of travel licenses issued by OFAC in 2004-2006 is not a 
reliable gauge of authorized U.S. travel to Cuba because not all 
approved licenses are used and U.S. citizens may travel to Cuba under 
general or group licenses.[Footnote 61] Additionally, with licensing 
data for family travel available for only 2 full years (2005-2006) 
after the embargo rule changes, it is not possible to analyze licensing 
trends. 

- CBP reports the total number of travelers on direct flights from the 
United States to Cuba, but U.S. agencies do not have reliable data or 
estimates for the number of authorized or unauthorized U.S. travelers 
visiting Cuba via flights from third countries, such as the Bahamas or 
Mexico.[Footnote 62] For example, OFAC officials told us that carriers 
and travel service providers report fewer authorized travelers on 
direct flights to Cuba since 2004, but the agency has no data on 
authorized or unauthorized travelers on flights via third countries. 

- The International Trade Center[Footnote 63] reports total numbers of 
U.S. travelers entering Cuba; however, these data are based on Cuban 
government data, which understate U.S. travel to Cuba because: 

Cuban authorities classify many U.S. residents visiting Cuba as 
returning Cuban citizens.[Footnote 64] 

A comparison of data on U.S. travel to Cuba reported by OFAC, CBP, and 
the U.S. International Trade Commission illustrates the discrepancies 
among the available data on travel to Cuba (see fig. 2). For example, 
in 2005, OFAC reported issuing about 26,000 licenses for travel to 
Cuba; CBP reported that about 90,000 passengers traveled directly from 
the United States to Cuba; and the International Trade Commission 
estimated that about 171,000 U.S. travelers entered Cuba, mainly Cuban 
Americans visiting family.[Footnote 65] 

Figure 2: Data on U.S. Travel to Cuba and Travel Licenses Issued, 2000- 
2006[A]: 

This figure is a combination bar chart showing data on U.S. travel to 
Cuba and travel licenses issued, 2000-2006. The shading represents ITC 
estimate, CBP statistics, and OFAC travel licenses.

[See PDF for image] 

Note: OFAC reports numbers of Cuba travel licenses issued, CBP reports 
numbers of passengers traveling directly from the United States to 
Cuba, and the International Trade Commission estimated total U.S. 
travelers in Cuba based on data reported to the UN World Tourism 
Organization by the Cuban government. 

[A] In 2000-2003, family travel was authorized under a general license, 
and therefore OFAC does not have comparable travel licensing data for 
this period. 

[End of figure] 

* Remittances and gifts. No reliable data exist for cash remitted 
directly or indirectly from the United States or for gift parcels sent 
to Cuba. 

- Although remittance forwarders are required to maintain records of 
cash sent from the United States to Cuba and to make these records 
available during an audit,[Footnote 66] data collected from these 
forwarders by OFAC are not reliable for estimating remittances sent 
from the United States to Cuba.[Footnote 67] In addition, the 
forwarders' records cover only remittances sent directly to Cuba, 
excluding remittances sent by informal means[Footnote 68] or indirectly 
from the United States via third countries. 

- Estimates of remittances to Cuba vary widely. A study by the Inter- 
American Dialogue estimated that U.S. remittances to Cuba in 2001 were 
$930 million.[Footnote 69] The 2004 CAFC report estimated that U.S. 
remittances to Cuba in 2003 ranged from $400 million to $800 million 
but acknowledged that they could be as high as $1 billion.[Footnote 70] 
A 2005 study by a Miami-based public opinion research consulting firm 
concluded that Cuban Americans sent approximately $460 million to their 
families in 2004.[Footnote 71] Data from several sources show that 
worldwide remittances to Cuba increased steadily from 1995 to 2005, 
from between $500 million and $600 million to between $900 million and 
$1 billion. 

- Regarding gift parcels, BIS maintains data on the value of approved 
gift parcel licenses approved but does not consistently or 
systematically collect data from the consolidators on the actual value 
of the parcels sent.[Footnote 72] In 2003, BIS issued 53 licenses with 
a total value of $236.9 million. In 2005, BIS issued 22 licenses with a 
total value of $100.4 million. 

Commenting on a draft of this report, Treasury said that estimating the 
impact of U.S. sanctions on Cuba is difficult; OFAC does not have the 
ability to monitor the movement of all travelers and funds from the 
United States to Cuba; and maintaining such data is impossible in an 
open economy with multiple means of violating sanctions. Treasury also 
noted that estimating the impact of U.S. sanctions on Cuba is more 
appropriately the role of State and the intelligence community but that 
some indirect data, such as media reports, indicate a sharp decline in 
U.S. tourism and dollars in Cuba since 2004. 

Agencies Performed More Licensing and Inspections, Straining Inspection 
Resources, while Most Investigations and Penalties Targeted Minor 
Violations: 

Following the embargo rule changes in 2001 and 2004, BIS and OFAC 
licensing of exports and travel to Cuba increased. CBP inspections of 
exports to Cuba and passengers arriving from Cuba at Miami 
International Airport also rose, reflecting administration policy, with 
the passenger inspections straining agency resources at the airport. 
Although OFAC administers more than 20 sanctions programs, OFAC cases 
related to the Cuba embargo after 2000 comprised the majority of the 
agency's investigation and penalty caseload. In contrast, BIS, ICE, and 
Justice reported undertaking relatively few investigations, penalties, 
and prosecutions of Cuba embargo violations because of their focus on 
competing homeland and national security priorities. 

Licensing Workloads for Exports and Travel to Cuba Generally Increased 
after Embargo Rule Changes: 

BIS's export licensing workload increased substantially after the 
implementation of export licensing rule changes in mid-2001. Similarly, 
OFAC's travel licensing workload increased significantly following the 
implementation of new, more restrictive travel rules in 2004. However, 
to accommodate its increasing licensing workload, OFAC has performed 
fewer audits of air carriers and travel, financial, and other service 
providers. The number of vessel permits issued by the U.S. Coast Guard 
dropped in 2006, after the agency tightened its application 
requirements. 

BIS Export Licensing Workload Doubled after Mid-2001 Rule Changes: 

After the implementation of TSRA-related rules changes in July 2001, 
the number of export license applications for Cuba[Footnote 73] 
processed by BIS doubled from 263 in fiscal year 2001 to 658 in fiscal 
year 2002--the first full fiscal year the new rules were in effect. The 
number of applications processed varied slightly in fiscal years 2003 
through 2005 before falling somewhat in fiscal year 2006 (see fig. 
3).[Footnote 74] Nevertheless, despite the overall substantial increase 
in Cuba license applications processed, these cases represented less 
than 4 percent of the more than 80,000 total export license 
applications that BIS processed in fiscal years 2000-2006. 

Figure 3: Cuba Export License Applications Processed by BIS, Fiscal 
Years 1999-2006: 

This figure is a bar chart with shading showing Cuba export license 
applications processed by BIS, fiscal years 1999-2006. The shading 
indicates license applications returned without action, license 
applications denied, and license applications approved. The X axis 
represents the year, and the Y axis represents license applications. 

[See PDF for image] 

Source: GAO analysis of Commerce (BIS) data. 

Notes: 

License applications include both standard and streamlined license 
applications. 

License applications are returned without action when the application 
and supporting documents provide insufficient information for Commerce 
to approve or deny the application. 

[End of figure] 

The impact of the increased export license processing workload on 
agency resources is unclear because BIS lacks data about some of its 
most challenging cases. Currently, most agricultural shipments are 
licensed under the streamlined process, which BIS reports consumes 
fewer resources than does the standard process.[Footnote 75] BIS 
officials estimate that the five licensing officers in the Foreign 
Policy Division of its Office of Nonproliferation and Treaty Compliance 
spend about 40 percent of their time processing applications for Cuba 
export licenses[Footnote 76]--about the same as the percentage of time 
they spent processing such applications before the 2001 embargo rule 
changes. However, processing some applications requires input from 
other Commerce offices and federal agencies. Additionally, agency 
officials told us that a limited number of export licensing 
applications for Cuba present unusual or foreign policy issues[Footnote 
77] and, because they require additional supervisory and interagency 
review and consideration, are time consuming and resource intensive. 
Although the officials said that the number of such cases had increased 
in recent years, they were unable to provide reliable estimates of the 
staff resources required to process these cases.[Footnote 78]. 

OFAC Travel Licensing Workload Increased Substantially after 2004 Rule 
Changes, Resulting in Fewer Audits of Service Providers: 

OFAC's licensing of travel to Cuba increased significantly following 
the implementation of the 2004 travel restrictions because the new 
regulations required specific licenses for family travel. A comparison 
of the 2-calendar-year periods immediately before and after the new 
restrictions shows that the number of licenses issued increased by 
about 24 percent, from 54,600 to 67,814 (see table 7). In 2002-2003, 
licenses authorizing additional family visits to Cuba in cases of 
humanitarian need accounted for nearly 98 percent of all Cuba licenses 
that OFAC issued.[Footnote 79] In 2005-2006, family travel licenses 
accounted for more than 96 percent of all Cuba licenses issued. 

Table 7: Comparison of Cuba Travel Licenses Issued by OFAC, 2002-2003 
and 2005-2006: 

Type of travel license: Humanitarian[A]; 2002: 23,920; 
2003: 29,343; 
Total 2002-2003: 53,263; 
2005: --; 
2006: --; 
Total 2005-2006: 
--. 

Type of travel license: Family travel[B]; 2002: --; 
2003: --; 
Total 2002-2003: --; 
2005: 25,304; 
2006: 40,308; 
Total 2005-2006: 65,612. 

Type of travel license: All others; 
2002: 620; 
2003: 717; 
Total 2002- 2003: 1,337; 
2005: 1,171; 
2006: 1,031; 
Total 2005-2006: 2,202. 

Total; 
2002: 24,540; 
2003: 30,060; 
Total 2002- 2003: 54,600; 
2005: 26,475; 
2006: 41,339; 
Total 2005-2006: 67,814. 

Source: GAO analysis of OFAC data. 

Note: Our analysis excludes data for 2004, because family travel was 
authorized under general or emergency licenses for the first half of 
the year and under specific licenses for the second half of the year. 

[A] Before the 2004 travel rule changes, individuals could apply for a 
specific Treasury license to make additional trips to visit family in 
Cuba during a 12-month period in cases of humanitarian need. 

[B] Before the 2004 travel rule changes, travelers visiting close 
relatives in Cuba could travel once every 12 months under a general 
license. The 2004 changes required each traveler to obtain a specific 
OFAC license prior to travel and limited visits to once every 3 years. 

[End of table] 

OFAC estimates that it currently has about nine staff--five in the 
office's Miami Field Office[Footnote 80] and four at headquarters-- 
working full time on Cuba embargo licensing, excluding some supervisory 
staff. In addition, some staff who work on one or more of the other 29 
sanctions programs administered by OFAC work on aspects of the Cuba 
embargo as necessary. OFAC reports that it has devoted fewer staff 
hours to the Cuba embargo since 2003[Footnote 81] because the demands 
of newer sanctions have required it to reallocate staff and it has 
automated aspects of the Cuba licensing program. OFAC officials also 
report that a limited but increasing number of Cuba licensing 
applications present unusual or foreign policy issues that require 
additional supervisory and interagency review. However, OFAC officials 
were unable to provide reliable estimates of the total staff resources 
devoted to enforcing the embargo on Cuba.[Footnote 82] 

In 2004, OFAC tasked its Miami field office with issuing the family 
travel licenses required by the new restrictions in lieu of auditing 
travel service providers and conducting public outreach. In 2004-2005, 
the first years the changes were in effect, field office staff 
processed family travel applications by hand and quickly developed a 
backlog of 6 to 8 weeks, according to OFAC data, in part because the 
process required screening to determine whether applicants had traveled 
to Cuba in the previous 3 years. To eliminate the backlog, the field 
office hired three contractors and, by the end of 2005, launched an 
automated system that enabled staff to process most applications in 24 
hours without the help of contractors. Several travel service providers 
in Miami told us that OFAC quickly processed their customers' 
applications and returned the licenses as files attached to e-mails. 
However, as of May 2007, four of five field office staff remained 
engaged full time in processing family travel license applications. 

In May 2007, OFAC officials told us that because most of the agency's 
Miami field office staff are engaged in processing travel license 
applications, OFAC has conducted few audits since 2004 of the more than 
200 carriers and agents licensed to provide travel, financial, and 
other services for Cuba.[Footnote 83] Prior to 2004, the Miami field 
office frequently audited these providers, in several cases detecting 
problems--such as missing or incomplete customer records--that resulted 
in OFAC's suspending the providers' licenses.[Footnote 84] In addition, 
OFAC officials said they suspect that some service providers were 
involved in the fraudulent use of travel licenses to violate the 
embargo. In 2006, OFAC resumed audits of service providers, auditing 11 
service providers and suspending 8 of them for significant violations 
of Treasury regulations.[Footnote 85] OFAC said the audits were part of 
a strategic initiative to shift the agency's enforcement focus from 
violations by individual travelers to violations by those in the travel 
industry that facilitate large numbers of embargo violations. None of 
the three travel service providers we visited in Miami had been audited 
by OFAC since 2004. 

U.S. Coast Guard Issued Fewer Vessel Permits after 2004 Rule Changes: 

The number of vessel permits issued by the Coast Guard for travel to 
Cuba dropped significantly after the agency issued new regulations for 
U.S. vessels entering Cuban territorial waters and changed its 
application requirements in response to the administration's policy of 
tightening the embargo.[Footnote 86] Starting in 2004, boaters applying 
for a permit were required to submit copies of valid OFAC travel 
licenses and BIS export licenses;[Footnote 87] previously, these 
documents were not required. In 2002, the Coast Guard issued more than 
500 vessel permits; however, after the new requirements took effect in 
2006, the Coast Guard issued only 38 permits. Coast Guard officials 
explained that most vessel permits currently issued are for 
humanitarian or religious groups. 

Screening All Exports to Cuba Has Little Impact on CBP Resources, but 
Increased Passenger Inspections Strain CBP Capacity at Miami Airport: 

CBP screens all exports bound for Cuba from Port Everglades, Florida; 
however, the impact of these screenings on agency resources is 
reportedly small. Since the 2004 embargo rule changes, CBP has 
increased its intensive (secondary) inspections of passengers arriving 
from Cuba at Miami International Airport,[Footnote 88] inspecting about 
20 percent of Cuba arrivals versus an average of 3 percent of other 
international arrivals in 2007. CBP data show that the high rate of 
intensive inspections of arrivals from Cuba, and the resulting 
seizures, have strained CBP's capacity to carry out its primary mission 
of keeping terrorists, criminals, and inadmissable aliens from entering 
the country at Miami International Airport. 

CBP Screens All Shipments to Cuba, with Little Impact on Agency 
Resources: 

Consistent with the President's October 2003 directive and 2004 CAFC 
recommendations to increase inspections of shipments to Cuba, CBP 
screens all container shipments bound for Cuba from Port 
Everglades.[Footnote 89] However, CBP reported that the impact of these 
screenings on agency resources is small. 

In a process it characterizes as risk based, CBP currently screens 
shipping documents and confirms export licenses for approximately 50 
container shipments bound for Cuba from Port Everglades 
monthly.[Footnote 90] CBP stated that exports to Cuba appear to be low 
risk owing to the repetitive nature of the shipments--mostly 
agricultural products--and the shippers' and carrier's high level of 
compliance with the embargo. CBP officials at the port said they have 
encountered a few administrative errors but no embargo violations on 
shipments destined for Cuba and that they maintain a cooperative 
relationship with the single carrier that currently ships cargo from 
Port Everglades to Cuba. 

According to CBP officials, implementing the policy of screening all 
shipments to Cuba has had a limited impact on officers' other duties 
(i.e., agency resources) because of the relatively small number of 
shipments to Cuba from Port Everglades. According to CBP, Port 
Everglades--one of the largest container ports on the East Coast-- 
handles about 26,000 container shipments monthly, including shipments 
bound for Middle Eastern and Persian Gulf countries that may pose 
transshipment risks. CBP told us that about 90 shipments are referred 
monthly for intensive, physical examination, based on automated risk 
assessments and officers' professional judgment. 

Intensive Inspections of Arrivals from Cuba Strain CBP Resources at 
Miami International Airport: 

CBP Inspection of International Passengers At inspection facilities in 
U.S. airports, CBP officers inspect passports, visas, and biometric 
data for all international passengers wishing to enter the United 
States, mainly to determine their admissibility into the country. 
Generally, international passengers arriving by air must present a U.S. 
passport, permanent resident card, foreign passport, or a foreign 
passport containing a visa issued by the Department of State. CBP 
officers also may inspect travelersï¿½ luggage. Because most travelers 
attempting to enter the country through these ports of entry have a 
legal basis for doing so, CBP uses a streamlined screening 
procedureï¿½primary inspectionï¿½to process individuals who can be readily 
identified as admissible. Persons whose admissibility cannot be readily 
determined, who are assessed as potentially posing a high risk of 
terrorism or major crimes, or who are randomly selected as part of a 
CBP statistical monitoring process are subjected to an intensive 
secondary inspection. The secondary inspection includes a closer review 
of travel documents and possessions, additional questioning by CBP 
officers, and cross references through multiple law enforcement 
databases to verify the travelerï¿½s identity, background, purpose for 
entering the country, and other corroborating information. At the end 
of this process, the individual may be admitted, refused entry and 
returned to the country of origin, or detained while admissibility is 
subject to further review.

Since 2004, CBP officials have reportedly referred for intensive, 
secondary inspection a higher percentage of passengers arriving from 
Cuba at Miami International Airport, reflecting the assessed risk of 
embargo violations. Agency data and statements by CBP officials suggest 
that the relatively high rate of Cuba embargo-related inspections and 
seizures strains CBP's resources at the airport--one of the nation's 
busiest--adversely affecting its ability to carry out its primary 
mission of keeping terrorist, criminals, and inadmissible aliens out of 
the country. This impact occurs in the context of recent GAO reports of 
weakness in CBP's inspection of travelers at major ports of entry 
nationwide. 

CBP officials told us that CBP had increased its inspections of 
travelers arriving from Cuba at the Miami airport since 2004. Moreover, 
CBP data show that in fiscal year 2007, about 20 percent of passengers 
arriving on flights from Cuba--mostly U.S. citizens or residents--were 
referred for secondary inspection, compared with about 3 percent of 
passengers arriving on flights from other countries, including source 
or transit countries for narcotics. According to CBP, the agency's risk 
management approach at Miami reflects an increased risk of embargo 
violations subsequent to Treasury's 2004 rule changes, which increased 
restrictions on family travel and remittances and eliminated the 
allowance for travelers to import up to $100 of Cuban products for 
personal consumption. 

Data provided by CBP suggests that the increase in secondary 
inspections of Cuba arrivals--most of them U.S. citizens or residents-
-and numerous resulting seizures of small amounts of Cuban products 
have strained its inspections resources at Miami International Airport. 
According to CBP data and officials: 

* During the processing of the eight daily flights from Cuba,[Footnote 
91] most of the airport's three secondary inspection facilities and 
most CBP inspections personnel at these facilities are occupied with 
inspecting Cuba arrivals and seizing contraband and, as a result, 
inspection of other arrivals is sometimes delayed. At each of the three 
facilities, a minimum of eight CBP officers and agriculture specialists 
are available to conduct secondary inspections, which sometimes involve 
x-raying and physically inspecting baggage. 

* Processing these seizures requires an average of about 14 staff hours 
per day and often requires overtime. CBP data show that seizures of 
contraband from Cuba arrivals average about 11 per day and lead to 
about 5 arrests monthly. CBP staff reported that processing each 
seizure takes from 45 minutes to 3 hours, depending on the type of 
violation. 

* During a 6-month period from October 2006 to March 2007, CBP's 
inspections of passengers and baggage arriving from Cuba at the Miami 
airport resulted in about 1,500 seizures, mostly small amounts of 
tobacco, alcohol, and pharmaceutical products. In contrast, CBP made 
465 seizures from passengers arriving on other flights at the Miami 
airport over the same 6-month period, including 111 seizures of drugs 
totaling 211 kilograms and 115 seizures of money totaling $2.4 million. 

The impact of CBP's Cuba-related inspections process on its ability to 
carry out its primary mission of protecting against terrorists and 
terrorist weapons at the Miami airport occurs in the context of recent 
GAO reports that found weaknesses in CBP's inspections capacity 
nationwide and highlighted that effective use of secondary inspections 
are critical to CBP's primary antiterrorism mission. In November 2007, 
we reported that CBP staffing shortages have affected its ability to 
carry out antiterrorism programs and have created other vulnerabilities 
in its inspections process at U.S. ports of entry.[Footnote 92] There 
is also a growing concern that terrorists with no criminal record may 
use legitimate travel documents when they attempt to enter the country 
through ports of entry. The report observed that the shortages and 
weaknesses increased the potential that terrorists and inadmissible 
travelers could enter the country and that failure to apprehend a 
potentially dangerous person increases the possibility that homeland 
and national security may be compromised. 

Most OFAC Investigations Related to Cuba Embargo, but BIS and ICE 
Shifted Resources to Homeland Security and Other Priorities: 

Officials at OFAC, BIS, and ICE said that after 2001, they shifted 
resources from investigations of suspected Cuba embargo violations to 
higher priorities, such as investigating suspected violations of other 
sanctions, terrorism, or other crimes that pose a high risk or threat 
to homeland or national security. However, in 2000-2006, OFAC conducted 
more investigations of Cuba embargo violations than of violations of 
all other sanctions. In contrast, Cuba embargo-related investigations 
comprised a minor part of BIS/OEE's and ICE's caseload. 

* OFAC. Although the Cuba embargo is one of more than 20 sanctions 
programs that the agency administers, OFAC data show that from 2000 
through 2006, investigations involving suspected violations of the Cuba 
embargo comprised 61 percent of its total investigatory caseload. Over 
that period, OFAC opened 10,823 investigations involving suspected 
violations of the Cuba embargo and 6,791 investigations involving
suspected violations of other sanctions[Footnote 93] (see fig. 4; table 
10 in app. IV provides additional information about OFAC's Cuba embargo 
and other sanctions investigations). 

Figure 4: OFAC Investigations of Suspected Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

This figure is a combination line and bar graph with shading showing 
OFAC investigations of suspected violations of the Cuba embargo and 
other sanctions programs. The line is showing Cuba cases as a 
percentage of total costs. One bar is showing Cuba cases, and the other 
bar is showing other program cases. The X axis is the year, and the 
left Y axis represents cases opened. The right Y axis represents 
percentage of total cases. 

[See PDF for image] 

Source: GAO analysis of Treasury (OFAC) data. 

[End of figure] 

OFAC was unable to provide data showing its allocation of staff 
resources to Cuba embargo and other investigations.[Footnote 94] 
However, according to OFAC officials, the agency has targeted a smaller 
proportion of its resources to Cuba embargo violations since 2001, 
because the agency assigns these cases a lower priority than cases 
involving terrorism, weapons of mass destruction, and national 
security. Additionally, OFAC officials said that Cuba embargo cases 
consume a much smaller portion of the agency's resources than the 
number of Cuba embargo violations suggests. The majority of Cuba 
embargo investigations involve unlicensed travel and imports of Cuban 
cigars; according to agency officials, such cases are relatively simple 
matters that require fewer resources per case than do complex cases 
involving suspected violations of U.S. trade and financial sanctions, 
such as those on Iran. In addition, although OFAC conducts only civil 
investigations, cases from all sanctions programs, including Cuba, can 
lead to criminal investigations by other agencies. Some of these cases 
may involve close collaboration between OFAC and the criminal 
investigative agency. 

* BIS. According to BIS officials, the agency devotes few resources to 
Cuba embargo-related investigations: as of mid-October 2007, BIS 
reported a total of 785 open enforcement cases nationwide, of which 26 
(about 3 percent) involved the Cuba embargo. Officials at BIS/OEE's 
field office in Ft. Lauderdale explained that because of the need to 
concentrate on homeland and national security issues, such as the 
illegal export of controlled, sensitive technologies, the office 
focuses few resources on investigations related to the Cuba embargo. 
The officials noted that the office's 6 agents, each with a workload of 
about 13 cases, give priority to cases related to homeland and national 
security, such as preventing the exportation to Iran of dual-use items 
that can be used as components for nuclear weapons.[Footnote 95] 

* ICE. According to agency officials, ICE investigations since 2001 
have focused increasingly on homeland security issues such as terrorism 
and crimes such as narcotics trafficking and money laundering rather 
than on Cuba embargo violations. Our analysis of ICE data show that the 
agency devoted 30 percent fewer investigative staff hours to Cuba 
embargo-related cases in fiscal years 2002-2006 than in fiscal years 
1997-2001. In fiscal years 2002-2006, Cuba embargo-related 
investigations accounted for an average of less than 0.2 percent of the 
agency's total investigative staff hours. In fiscal year 2006, ICE 
conducted five investigations of potential trade and travel violations 
of the embargo; in the first half of fiscal year 2007, ICE reported 
seven ongoing investigations related to the embargo. According to ICE 
officials, the slight increase in Cuba-related cases this year has 
resulted from actions by several federal agencies in response to the 
administration's policy of tightening the embargo. 

Most OFAC Penalties Targeted Cuba Embargo Violations, but BIS Penalties 
and Justice Prosecutions Focused on Other Priorities: 

From 2000 through 2005, OFAC imposed more penalties for violations of 
the Cuba embargo than for the other sanctions programs it administers; 
although the number of OFAC penalties for Cuba embargo violations fell 
in 2006, OFAC was unable to provide reliable estimates of staff 
resources devoted to enforcing the embargo. In recent years, BIS has 
imposed few fines for violations of the Cuba embargo and U.S. Attorneys 
have conducted few prosecutions of such violations. Officials at BIS 
and Justice told us that although minor violations of some embargo 
restrictions probably are widespread, they have focused agency efforts 
on penalizing and prosecuting export control and other cases that 
present a greater threat to public safety and homeland and national 
security. 

* OFAC. Reflecting the relatively large number of embargo-related 
investigations opened in 2000 through 2006, OFAC imposed a substantial 
number of civil penalties for Cuba embargo violations during that 
period.[Footnote 96] Our analysis of OFAC data shows that from 2000 
through 2006, the agency collected fines totaling about $8.1 million 
for 8,170 violations of the Cuba embargo--an average of $992 per 
violation. Most of these violations were relatively minor, such as 
purchasing Cuban cigars on the Internet.[Footnote 97] Over the same 
period, OFAC imposed fines totaling about $12.4 million for 3,054 
violations of other sanctions programs, such as those on Iran, North 
Korean, and Syria--an average of about $4,071 per violation. (Table 11 
in app. IV provides additional data about OFAC's Cuba embargo and other 
sanctions penalties.) 

Although the Cuba embargo is one of more than 20 sanctions programs 
that the agency administers, OFAC data show that from 2000 through 
2005, Cuba embargo cases--most involving unlicensed travel and imports 
of Cuba cigars--accounted for over 70 percent of the agency's total 
penalty cases. However, in 2006, the number of fines collected fell to 
290 and Cuba embargo cases accounted for 29 percent of total penalty 
cases (see fig. 5.) OFAC said that this decline reflected a decision to 
focus more resources on penalizing violations of other sanctions 
programs. Similarly, according to OFAC, the decline in the average 
value of fines collected for Cuba embargo cases after 2001 reflects a 
decision to better utilize agency resources by issuing warning letters 
rather than penalties or by informally settling with offenders for 
lower fines than might have been assessed through the formal penalty 
process.[Footnote 98] 

Figure 5: OFAC Civil Penalty Cases and Fines for Violations of the Cuba 
Embargo, 2000-2006: 

This figure is a combination of two graphs. Both are combination line 
and bar graphs. 

The graph on the left represents the number of Cuba penalty cases and 
average value of fines collected. The line represents the average value 
of Cuba fines. The bars represent the number of Cuba penalty cases. The 
X axis represents the year, the Y axis on the left represents the 
number of Cuba penalty cases and average value of fines collected. The 
Y axis on the right represents the average fine (dollars). 

The graph on the right represents the Cuba penalty cases and fines as a 
percentage of total cases and fines. The line represents Cuba fines as 
a percentage of total fines collected. The bar represent Cuba penalty 
cases as a percentage of total penalty cases. Th X axis represents the 
year, and the Y axis represents the percentage of total cases and 
fines. 

[See PDF for image] 

Source: GAO analysis of Treasury (OFAC) data. 

[End of figure] 

OFAC was unable to provide reliable estimates of the staff resources 
devoted to imposing penalties for Cuba embargo violations.[Footnote 99] 
However, OFAC said that compared with violations of other sanctions, 
most Cuba embargo violations involving individual travel or imports are 
simpler and involve repetitive fact patterns, resulting in more 
efficient processing and requiring fewer resources. OFAC said that 
cases involving group travel and travel service providers are typically 
more complex, and cases involving commercial trade violations tend to 
involve the same amount of resources regardless of the sanctions 
program. 

* BIS. Since 2001, reflecting the low priority it assigns to its Cuba 
embargo-related investigations and few resources, BIS has imposed 
relatively few Cuba embargo penalties. In 2002-2006, BIS collected 
civil fines totaling $49,500 for nine violations of the Cuba embargo 
involving two companies.[Footnote 100] In contrast, over the same 
period, BIS collected about $30 million in fines for 281 violations of 
export controls and sanctions on countries such as Iran. BIS also has 
issued few warning letters related to violations of the Cuba embargo; 
in 2006, less than 10 percent of BIS's almost 200 warning letters 
related to the embargo. 

* U.S. Attorneys. Justice reports that U.S. Attorneys have prosecuted 
few cases involving violations of the Cuba embargo in recent 
years[Footnote 101] because, for many of the reasons previously stated, 
the investigatory agencies (OFAC, BIS, and ICE) have presented few 
cases for prosecution. Officials at the U.S. Attorney's Office in 
Miami,[Footnote 102] however, have expressed a commitment to pursue 
criminal prosecutions of cases involving violations of the embargo and 
report having recently begun to put more emphasis on these cases. 
Following efforts by the interagency taskforce that the office 
established in 2006,[Footnote 103] the office filed a criminal 
indictment in 2007 against individuals who conspired to provide 
fraudulent religious licenses to facilitate more than 4,500 illegal 
trips to Cuba--the first embargo-related indictment in several 
years.[Footnote 104] The lead defendants pled guilty and recently were 
sentenced to 12 and 30 months' imprisonment, and two others to 4 
months' home confinement. The U.S. Attorney's Office in Miami reports 
that this prosecution has resulted in approximately two dozen leads on 
other large-scale trip organizers, of which investigations are 
presently being pursued. Although the U.S. Attorney's Office in 2006 
implemented a policy of considering for prosecution any embargo 
violation presented to it by an investigatory agency, the Office 
indicated a strong preference for prosecuting the more significant 
cases, as opposed to the more common individual cases, citing the 
resources required and the frequent humanitarian issues involving in 
prosecuting individual violations. The U.S. Attorneys Office in Miami, 
for example, said that it does not intend to pursue criminal charges 
against the 4,500 individuals, who paid $250 each to obtain the 
fraudulent religious licenses, on the grounds of both limited resources 
and humanitarian issues involved in prosecuting individuals on family 
travel. 

U.S. Agencies Face Several Challenges in Enforcing the Embargo on Cuba: 

U.S. officials and others cited the following key factors as hindering 
agencies' enforcement of the U.S. embargo on Cuba: (1) lack of foreign 
support for, and cooperation with, the embargo; (2) divided U.S. public 
opinion about the embargo, particularly the recent tightening of 
restrictions; (3) the difficulty of detecting some embargo violations; 
and (4) the embargo's complexity and changing rules. In some cases, 
these factors act in concert. 

Lack of Foreign Support Hampers Diplomacy, Investigations, and 
Prosecutions: 

Although most countries recognize the right of the United States to 
determine its own foreign policy and security concerns, the embargo's 
unilateral nature and a lack of multilateral cooperation with the 
embargo impede U.S. efforts to isolate the Cuban regime diplomatically 
and deny it hard currency resources. Although State officials have 
testified that sanctions are best implemented within a diplomatic 
framework based on broad multilateral consensus, the department has 
been unable to obtain such foreign support for the United States' Cuba 
embargo policy. 

* Many countries, particularly Canada, Mexico, and the members of the 
European Union, pursue different strategies in their diplomatic 
relations with Cuba. Although the European Union and others share the 
United States' ultimate goal of a free, democratic, and market-oriented 
Cuba, differences remain between the United States and other countries 
concerning the best method to encourage democracy and human rights on 
the island. In general, the governments of these countries favor a 
policy of cautious engagement with the Cuba, with normalization 
conditioned on evidence of improved human and political rights. 

* Opposition by many countries--particularly Canada, Mexico, and the 
members of the European Union--to the extraterritorial application of 
U.S. laws and regulations under the Cuba embargo[Footnote 105] has 
created diplomatic and trade disputes as well as problems for 
individual U.S. firms.[Footnote 106] Cooperation with the U.S. embargo 
is explicitly illegal in some countries and may violate laws in other 
countries that prohibit discrimination based on nationality.[Footnote 
107] Over most of the past 16 years, an overwhelming number of UN 
member states have voted annually to condemn the U.S. embargo for, 
among other issues, its extraterritorial effects[Footnote 108] (app. V 
summarizes the results of these votes from 1992 through 2007). However, 
recent Commerce foreign policy reports state that the administration 
has worked diligently with other nations, especially countries in 
Europe and Latin America, to resolve these disputes.[Footnote 109] 
Moreover, State officials noted that recently a number of Canadian and 
European banks have ceased doing business with Cuba.[Footnote 110] 

* Some countries have taken steps to undermine the embargo,[Footnote 
111] for example, by refusing to identify U.S. travelers making 
unauthorized visits to Cuba[Footnote 112] or to allow their citizens to 
provide evidence or testify in embargo-related cases.[Footnote 113] 
These countries also have not cooperated in efforts to block the export 
of U.S.-made items to Cuba. U.S. officials reported that this lack of 
cooperation complicates agencies' embargo monitoring and investigatory 
work. 

* Countries that do not support the U.S. embargo conduct normal trade, 
financial, and travel relations with Cuba, and some governments and 
multilateral institutions provide development and economic assistance 
to Cuba. These actions increase the amount of hard currency available 
to the Castro regime, undercutting one of the U.S. embargo's stated 
purposes.[Footnote 114] For example, the Central Intelligence Agency 
reports that in 2006, Cuba exported an estimated $3 billion in 
commodities, increasing its exports by two-thirds since 2000,[Footnote 
115] and imported an estimated $10.2 billion, nearly tripling its 
imports since 2000.[Footnote 116] In 2005, according to the UN World 
Tourism Organization, Cuba hosted nearly 2.3 million international 
tourists, generating income of more than $1.9 billion--22 percent and 4 
percent more tourists and income, respectively, than in 2003.[Footnote 
117] Moreover, direct flights to Cuba are available from European and 
Latin American countries as well as from Canada. 

Divided U.S. Public Opinion Presents Enforcement Challenges: 

Officials from OFAC, BIS, ICE, CBP, U.S. Coast Guard, and the U.S. 
Attorney's Office in Miami reported that community polarization on 
embargo issues--particularly the changes implemented since 2004-- 
presents challenges that affect agencies' abilities to enforce the 
embargo. Some agency officials said that lack of public support for the 
embargo, coupled with the controversial nature of recent rule changes, 
has contributed to widespread, small-scale violations of embargo 
restrictions on family travel and remittances and an environment in 
which some individuals can profit from illegal activities, such as 
selling fraudulent religious and other travel licenses. 

* Some human rights and religious groups and others have criticized the 
increased restrictions on family travel and remittances, with certain 
groups maintaining that the travel restrictions violate constitutional 
rights, humanitarian norms, and several international agreements to 
which the United States is a party.[Footnote 118] These groups have 
particularly objected to hardships created by the elimination of the 
specific license for additional family visits in cases of humanitarian 
need. Others have complained about the disparity between restrictions 
on family travel and remittances and restrictions on trade and trade- 
related travel,[Footnote 119] or that their new restrictions on 
educational travel compromise academic freedom. In addition, religious 
groups have claimed that the new restrictions on religious travel 
unconstitutionally constrain the free exercise of religion. 

* Several U.S. organizations have engaged in acts of civil disobedience 
against the embargo, such as refusing to apply for licenses for 
religious travel or humanitarian exports to Cuba, claiming that in 
their view the U.S. embargo violates protected constitutional, human, 
or religious rights.[Footnote 120] Agency officials told us that before 
2005, they had unilaterally issued licenses to at least one of these 
groups to deliver humanitarian exports to Cuba and that the decision in 
2005 to enforce the restrictions against these groups strictly created 
an enforcement and public relations dilemma. 

* Some U.S. agricultural producers and exporters, industry groups, and 
state government officials have criticized but complied with OFAC's 
strict interpretation of TSRA's cash-in-advance payment requirement. 
Some of these groups have called for eliminating the cash-in-advance 
payment or third-country financing requirements or the entire embargo. 

Some Embargo Violations Are Difficult to Detect: 

U.S. officials said that the difficulty of detecting certain embargo 
violations, such as use of fraudulent licenses and other documents, 
creates challenges to enforcing the embargo. 

* Agency officials said that detection of fraudulent Treasury licenses 
and other documents is difficult. Travel licenses can be duplicated on 
a computer,[Footnote 121] and no fast, automated system exists for CBP 
to check whether licenses are legitimate. Moreover, smugglers and 
others attempting to travel with fake documents can easily avoid 
detection by not boarding a flight if they observe that CBP is 
conducting inspections of departing passengers.[Footnote 122] CBP Miami 
reports that, since the 2004 rule changes went into effect, it has 
identified several thousand fraudulent travel licenses. 

* CBP and ICE officials reported that new financial services 
technologies present opportunities for sending funds to Cuba in 
violation of the U.S. embargo. In particular, travelers can easily exit 
the United States carrying stored-value cards worth hundreds of 
thousands of dollars.[Footnote 123] CBP officers noted that they 
generally lack the authority and technology to examine these cards. In 
addition, a number of non-U.S. online transfer services provide 
opportunities for sending funds to Cuba without detection, and some of 
these sites allow transfers greater than the limit, and without other 
restrictions, imposed by the CACR.[Footnote 124] 

* ICE and BIS/OEE officials reported that widespread money laundering 
in Southern Florida--specifically, the region's Black Market Peso 
Exchange[Footnote 125]--created additional opportunities for 
transferring funds illegally to Cuba without detection via third 
countries. Officials also noted that the close relations between Cuba 
and Venezuela created opportunities for U.S. residents or companies to 
transship goods or transfer funds illegally to Cuba via Venezuela. 

Embargo Complexity and Changes Create Public Uncertainty: 

Officials report that the embargo's complexity and rule changes have 
created public uncertainty and made compliance more difficult. 

* Agency officials said that some small-scale violations and confusion 
may reflect the complexity and recent changes to regulations governing 
allowable travel, cash remittances, allowable baggage, and other 
transactions. For example, immediately after the travel rule changes in 
2004, it was unclear to both passengers and CBP officers whether the 
new 44-pound limit on baggage for family travel applied to personal 
safety and medical commodities for use by travelers, such as 
wheelchairs, crutches, portable medical devices (e.g., oxygen tanks), 
and child safety seats and strollers. In 2006, BIS clarified that the 
new limit did not include these items; however, before the 
clarification some passengers had these items counted against their 
limit while others did not. 

* BIS officials told us that frequent changes in the regulations since 
2000 have made compliance difficult for U.S. companies. Additionally, 
BIS reported that companies sometimes find intersection of the CACR, 
TSRA, and U.S. export controls confusing. For example, some exporters 
are confused by the fact that exports of TSRA-eligible medical products 
to Cuba are subject to different licensing requirements than exports of 
the same products to other designated state sponsors of 
terrorism.[Footnote 126] 

Conclusions: 

The comprehensive U.S. embargo on Cuba has been in effect for nearly 50 
years as an expression of overall U.S. foreign policy toward the Castro 
regime and as a means of depriving Cuba of hard currency. At the same 
time, U.S. policymakers have provided certain exceptions to the 
embargo, both for Cuban Americans who seek to maintain ties with family 
members in Cuba through travel, cash remittances, and gifts, and for 
others participating in educational, religious, and informational 
exchanges. Since 2004, the United States has tightened the rules 
governing these exceptions--directly affecting Cuban Americans and 
other Americans who have sought to conduct authorized travel and cash 
remittances--to further deny Cuba hard currency. However, U.S. agencies 
cannot determine the actual impact of the rule changes on the 
availability of hard currency to Cuba, in part because available data 
cannot reflect unauthorized travel and remittances--travel licenses are 
easily counterfeited, travelers may transit through countries that 
oppose the embargo, and new technologies for remittances and other 
international money transfers make tracking such remittances 
impossible. 

Following the September 2001 terrorist attacks, several agencies 
redirected resources from enforcing the Cuba embargo to accomplishing 
homeland and national security priorities, such as stopping terrorism, 
weapons proliferation, narcotics trafficking, and money laundering. For 
example, reflecting DHS's strategic emphasis on targeting its resources 
to priority threats and vulnerabilities, ICE devoted 30 percent fewer 
staff hours to investigating Cuba embargo violations in fiscal years 
2002-2006 than in the previous 5 fiscal years. However, reflecting 
administration policy and embargo rule changes, two agencies maintained 
a focus on enforcing the Cuba embargo. Based on its assessment of the 
risk of embargo violations after 2004, DHS's CBP increased its 
intensive, secondary inspections of arrivals from Cuba at Miami 
International Airport--one of the nation's busiest--and, in fiscal year 
2007, conducted secondary inspections of 20 percent of arrivals from 
Cuba versus 3 percent of arrivals from other countries. Our analysis of 
CBP data and interviews with CBP officials show that this intensive 
inspection of travelers and the numerous resulting seizures of small 
amounts of Cuban-made products have sometimes occupied a majority of 
the airport's secondary inspection facilities and delayed inspections 
of other passengers, straining the agency's resources for accomplishing 
its priority mission: keeping terrorists, criminals, and inadmissible 
aliens out of the country while facilitating the flow of legitimate 
trade and travel. This impact is especially troublesome in the context 
of recent GAO reports of weaknesses in CBP's inspections capacity at 
major ports of entry nationwide, which increase the potential of 
terrorists' and inadmissable travelers' entering the country. In 
addition, since 2000, Treasury's OFAC--responsible for administering 
more than 20 sanctions programs--has conducted more investigations and 
issued more penalties related to the Cuba embargo than for all of the 
other sanctions programs it administers. OFAC officials stated that 
Cuba embargo cases required fewer resources, but they could not provide 
data showing that the agency's resource allocations appropriately 
support its responsibility to enforce other sanctions, including those 
on countries engaged in terrorism, weapons proliferation, and narcotics 
trafficking. 

Recommendations for Executive Action: 

In light of the recognized weaknesses in CBP's inspections capacity at 
major ports of entry, we recommend that the Secretary of Homeland 
Security direct CBP to re-evaluate whether the current level of 
resources focused on secondary inspections of passengers arriving from 
Cuba at the Miami airport effectively balances its responsibility for 
enforcing the Cuba embargo with its responsibilities for keeping 
terrorists, criminals, and inadmissible aliens out of the country. 

In addition, in light of OFAC's responsibilities for administering more 
than 20 sanctions programs, including sanctions against countries 
engaged in terrorism, weapons proliferations, and narcotics 
trafficking, we recommend that the Secretary of the Treasury direct 
OFAC to assess its allocation of resources for investigating and 
penalizing violations of the Cuba embargo with respect to the numerous 
other sanctions programs it administers. 

Agency Comments and Our Evaluation: 

The Departments of Homeland Security, the Treasury, State, and Commerce 
provided written comments regarding a draft of this report, which we 
have summarized below with our responses (see apps. VI through IX, 
respectively, for the agencies' complete comments). In addition, these 
agencies and Justice provided technical clarifications, which we 
incorporated as appropriate. 

* DHS. DHS's comments focused on our draft recommendation that CBP use 
a risk-based approach in allocating staff and other resources at Miami 
International Airport. DHS wrote that although CBP officials agreed 
with the intent of the recommendation, they considered it unwarranted. 
CBP asserted that it has historically used, and continues to use, 
analysis and risk management principles in allocating resources and 
"throughout the cargo and passenger environments according to CBP 
guidelines." DHS also stated that CBP's use of resources to increase 
inspections of flights from Cuba did not reduce its inspections of 
other flights and that CBP has "maintained a consistent inspection of 
all flights." In response to these comments, we revised our report and 
recommendation to emphasize the need for CBP to re-evaluate whether the 
current level of resources focused on secondary inspections of 
passengers arriving from Cuba at the Miami airport effectively balances 
its responsibility for enforcing the Cuba embargo with its 
responsibilities for keeping terrorists, criminals, and inadmissible 
aliens out of the country. As our report states, CBP acknowledged that 
in 2004, following changes in administration policy and embargo rules, 
its officers began referring more passengers arriving from Cuba for 
secondary inspection. In addition, DHS acknowledged that in fiscal year 
2007, CBP conducted secondary inspections of about 20 percent of 
passengers from Cuba versus about 3 percent of international passengers 
from other countries. Further, CBP officials told us that these 
intensive inspections--along with the numerous resulting seizures of 
mostly small amounts of Cuban tobacco, alcohol, and pharmaceutical 
products--occupy a majority of the staff and facilities available for 
secondary inspections and frequently result in overtime at the Miami 
airport. Our report also observes that this adverse effect occurs in 
the context of recently reported weaknesses in CBP's inspections 
capacity at major ports of entry nationwide, which increase the 
possibility of terrorists' and inadmissable travelers' entering the 
country. 

* Treasury. Treasury expressed neither agreement nor disagreement with 
our draft recommendation that OFAC assess the consistency of its 
resource allocations related to Cuba embargo violations with the risk 
of these violations to U.S. security. Treasury stated that OFAC's 
resources for investigating and penalizing violations of the Cuba 
embargo and other sanctions programs are allocated according to the 
agency's priorities, legal obligations to enforce all sanctions laws 
fairly, and volume of work. Treasury reiterated that Cuba-related cases 
represent a smaller portion of OFAC's enforcement work and require 
fewer resources than the number of such cases suggests. However, 
Treasury's comments do not address our finding that, since 2000, OFAC 
has conducted more investigations and imposed more penalties for 
violations of the Cuba embargo than for all of the other 20-plus 
sanctions programs the agency implements, including sanctions related 
to terrorism, weapons proliferation, and narcotics trafficking. In 
contrast, we report that other agencies reduced the resources devoted 
to Cuba embargo violations after 2001 to focus on cases presenting a 
greater threat to homeland and national security and that embargo- 
related cases comprise a small percentage of their workloads. In 
addition, Treasury did not provide data showing OFAC's allocation of 
resources for the Cuba embargo versus the more than 20 other sanctions 
programs it administers. 

* State. State expressed neither agreement nor disagreement with our 
report. Rather, State noted the U.S. policy of encouraging a rapid, 
peaceful transition to democracy in Cuba and emphasized the importance 
of maintaining and enforcing U.S. trade and travel restrictions to 
support this process. 

* Commerce. Commerce's letter, which provided several technical 
clarifications, expressed neither agreement nor disagreement with our 
report. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to interested 
congressional committees; the Secretaries of Commerce, Homeland 
Security, State, and Treasury; and the Attorney General. We also will 
make copies available to others on request. In addition, this report 
will be available at no charge on the GAO Web site [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-3149 or g [Hyperlink, [email protected]] 
[email protected]. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. GAO staff who made major contributions to this report are 
listed in appendix X. 

Signed by: 

David Gootnick: 

Director, International Affairs and Trade: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report examines (1) the changes to the rules for the U.S. embargo 
on Cuba in 2001 through 2005 and these changes' impact on U.S. exports, 
travel, cash remittances, and gifts to Cuba; (2) U.S. agencies' 
activities and workloads in enforcing the embargo; and (3) factors that 
have affected the embargo's enforcement. 

To identify the changes to the embargo rules in 2001 through 2005 and 
assess these changes' impact on U.S. exports, travel, remittances, and 
cash gifts to Cuba, we analyzed laws and regulations that establish the 
embargo and export controls on Cuba, such as the Trading with the Enemy 
Act of 1917,[Footnote 127] the Cuban Democracy Act,[Footnote 128] the 
Cuban Liberty and Democratic Solidarity (LIBERTAD) Act,[Footnote 129] 
the Trade Sanctions Reform and Export Enhancement Act of 2000,[Footnote 
130] the Cuban Assets Control Regulations (CACR)[Footnote 131] and 
other agency regulations, and appropriate entries in the Federal 
Register. We also discussed the changes with officials and attorneys at 
the Departments of Commerce, Homeland Security (DHS), Justice, State, 
and Treasury, and reviewed agency fact sheets and other literature 
available from agency officials and Web sites. To assess the status of 
the recommendations and other initiatives in the 2004 and 2006 reports 
of the interagency Commission for Assistance to a Free Cuba 
(CAFC),[Footnote 132] we compared them with entries in the Federal 
Register and discussed their implementation with agency officials, 
including State's Cuba Transition Coordinator. We also reviewed legal, 
Congressional Research Service,[Footnote 133] and other analyses of the 
embargo rule changes. With regard to the impact of the 2001-2005 rule 
changes, we reviewed economic and other studies of the Cuba embargo, 
such as the U.S. International Trade Commission's (ITC) July 2007 
report[Footnote 134] and reports from the Congressional Research 
Service. We also analyzed data on, and analyses of, travel, trade, and 
remittances from a variety of sources, including Treasury's Office of 
Foreign Assets Control (OFAC), Commerce's Bureau of Industry and 
Security (BIS), DHS's Customs and Border Protection (CBP), the U.S. 
Census Bureau, the U.S. Department of Agriculture's Foreign 
Agricultural Service, the Central Intelligence Agency, the United 
Nations (UN), the Inter-American Development Bank, other multilateral 
institutions, the Cuban government, prior GAO reports, and private 
firms. We judged that available data were sufficiently reliable for 
assessing the impact of rule changes related to the Trade Sanctions 
Reform and Export Enhancement Act of 2000 (TSRA) on U.S. exports to 
Cuba but not for assessing the impact of new restrictions on U.S. 
travel and remittances to Cuba. 

To identify U.S. agencies' activities and workloads in implementing and 
enforcing the embargo for 2000-2006, we analyzed Commerce, DHS, 
Justice, State, and Treasury records, including agency strategic and 
performance plans, performance and budget reports, congressional 
testimonies, mission statements, and organization charts and other 
records, such as prior GAO reports.[Footnote 135] We examined four 
general types of agency activities: (1) licensing trade, travel, and 
financial transactions; (2) inspecting travelers and exports and 
auditing licensed service providers; (3) investigating suspected 
embargo violations; and (4) prosecuting or imposing civil fines or 
penalties on violators. 

* Licensing. We analyzed BIS and OFAC licensing data, obtained 
estimates of staff devoted primarily to Cuba licensing, and reviewed 
data from the U.S. Coast Guard about the number of vessel permits 
issued. We discussed changes in licensing workload--including the 
streamlined BIS licensing process required by TSRA--and staffing with 
agency officials in Washington, D.C., at OFAC's Miami field office, and 
with the U.S. Coast Guard's headquarters in Washington, D.C., and 
district command in Miami. Agency officials were unable to provide 
accurate estimates of the staff working part time on the Cuba embargo-
-for example, the staff involved in the interagency consideration of 
license applications with unusual or foreign policy issues--because 
they do not routinely segregate time charges by sanctions regimes for 
the attorneys, functional specialists, and senior officials involved in 
these cases. We also discussed the license application process with 
three travel service providers in Miami. 

* Inspections and audits. We analyzed the volume of shipments and 
number of flights to Cuba and the airports and ports handling this 
traffic using CBP and U.S. Census Bureau data. Based on this analysis, 
we conducted fieldwork at Port Everglades (Ft. Lauderdale, Florida)-- 
the third largest U.S. port for U.S. exports to Cuba and the only one 
handling container shipments--and Miami International Airport, Florida--
currently the only U.S. airport with regular, direct service to Cuba. 
We analyzed data about CBP inspections at Port Everglades and Miami 
International Airport; obtained estimates of CBP officers devoted to 
inspecting shipments departing for Cuba and passengers arriving from 
Cuba and at these and other locations; and observed agency inspections 
of cargo at Port Everglades and travelers and baggage at the Miami 
airport. We also analyzed data on CBP seizures of drugs, money, and 
other materials from passengers arriving from Cuba and other 
destinations at Miami International Airport. We discussed CBP's 
inspection activities and workload, including the role of CBP's 
automated targeting and export systems[Footnote 136] in identifying 
cargos and passengers that may pose a high risk to homeland or national 
security, as well as the U.S. Coast Guard's role in inspecting vessels 
sailing to or from Cuba, with agency officials in Washington, D.C., and 
Florida. To obtain information about OFAC's current and previous audits 
of travel and financial service providers, we interviewed agency 
officials in Washington, D.C., and Miami; reviewed agency records; and 
discussed the audits with three travel service providers in Miami. 

* Investigations. We analyzed data from OFAC, BIS's Office of Export 
Enforcement (BIS/OEE), and DHS's Immigration and Customs Enforcement 
(ICE) about the number of, and staff resources devoted to, 
investigations of suspected embargo violations and audits of licensed 
carrier, travel, and financial service providers, and discussed these 
investigations and audits with agency officials in Washington, D.C., 
OFAC's and ICE's Miami field offices, and BIS/OEE's Ft. Lauderdale 
field office. We also discussed the role of ICE's Exodus Command Center 
in supporting ICE criminal investigations and CBP outbound cargo 
inspections by coordinating their actions with the agencies involved in 
export licensing (primarily BIS, OFAC, and State).[Footnote 137] 

* Prosecutions and fines. We analyzed data from OFAC and BIS about the 
number and value of fines imposed, as well as data from Justice about 
the number of prosecutions and convictions, for violations of the Cuba 
embargo from 2000-2007,[Footnote 138] and we discussed these 
prosecutions with agency officials in Washington, D.C., and the U.S. 
Attorney's Office in Miami.[Footnote 139] OFAC has not maintained data 
on the number of Cuba embargo prosecutions since 2001, and because of 
limitations in Justice's database, we were unable to obtain accurate 
information from the department about the number of prosecutions and 
convictions related to violations of the Cuba embargo.[Footnote 140] As 
a result, we relied on anecdotal information provided by agency 
officials and our analysis of a limited number of OFAC, BIS, and 
Justice records with references to embargo prosecutions and 
convictions. 

To identify and evaluate factors that have affected the embargo's 
implementation and enforcement, we obtained agency officials' views and 
reviewed agency records and reports, such as Commerce's annual foreign 
policy reports,[Footnote 141] and other assessments of the embargo and 
U.S. sanctions policy more generally, including Congressional Research 
Service and prior GAO reports.[Footnote 142] Based on our discussions 
with agency officials and analysis of records, we examined four 
specific factors: (1) lack of foreign support and cooperation, (2) 
divided U.S. public opinion, (3) the embargo's complex and changing 
rules, and (4) the difficulty of detecting some violations. 

* Lack of foreign support. To identify and assess foreign government 
views on the U.S. embargo on Cuba and related issues, we analyzed UN 
resolutions and records of General Assembly votes on the U.S. embargo 
from 1992-2006, statements by foreign governments accompanying those 
votes, and other statements or reports by foreign governments on the 
U.S. embargo. We also analyzed data from the Central Intelligence 
Agency's World Factbook, the United Nations, and other sources to 
assess changes in foreign countries' trade, financial, and travel 
relations with Cuba. We obtained agency officials' views about U.S. 
efforts to obtain foreign cooperation and support for enforcing the 
embargo, as well as how the lack of such support affects enforcement 
and U.S. efforts to isolate the Cuban regime diplomatically and deny it 
hard currency resources in the pursuit of broad U.S. foreign policy 
goals. 

* Divided public opinion. We obtained the views of OFAC, BIS, ICE, CBP, 
U.S. Coast Guard, and Justice officials about the nature and extent of 
public opposition to the embargo, and how divided public opinion 
affects embargo compliance and agency efforts to enforce the embargo. 
We reviewed reports, testimonies, letters, and other records from human 
rights, religious, and other groups summarizing their positions on the 
U.S. embargo on Cuba, particularly the changes in embargo rules after 
2000, and interviewed representatives of some of these groups. 

* Complex and changing rules. We obtained the views of OFAC, BIS, BIS/ 
OEE, CBP, and ICE officials about the complexity of the embargo rules 
and other export control regulations that apply to Cuba and the nature 
and effectiveness of agencies' efforts to explain embargo restrictions 
and changes to the U.S. public and companies. We also reviewed 
testimony and statements by U.S. companies and trade groups. 

* Difficulty of detecting some violations. We obtained the views of 
CBP, ICE, OFAC, BIS, and BIS/OEE officials about the difficulty of 
detecting some embargo violations. We reviewed the 2007 National Money 
Laundering Strategy and other assessments of the impact of new 
technologies and other factors on agency efforts to monitor and control 
the international transfer of funds. Using simple Internet searches and 
information from a study of remittances to Cuba, we identified non- 
U.S.-based online services offering cash transfers to Cuba. We 
contacted a judgmental sample of some of these services to determine 
whether they enforced U.S. restrictions about the amount, frequency, 
and recipients of U.S. cash remittances to Cuba. We obtained the views 
of OFAC, CBP, and ICE officials about the security of OFAC travel 
licenses, and data from CBP about the numbers of fraudulent licenses 
identified since 2004. 

We conducted our work between December 2006 and November 2007, in 
accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Evolution of the U.S. Embargo: 

Table 8: Evolution of the U.S. Embargo on Cuba, 1960-2007: 

Year: 1960; 
Key events/changes (month): United States imposes embargo on exports to 
Cuba, except for food and medicines (Oct.); 
Related or other events (month): 
* Cuba and the Soviet Union resume diplomatic relations (May); 
* Cuba confiscates U.S.-owned oil refineries (June); 
* United States suspends Cuba's sugar quota (July); 
* Cuba begins nationalizing U.S.-and foreign-owned property (Aug.) 

Year: 1961; 
Key events/changes (month): United States breaks diplomatic relations 
with Cuba (Jan.); 
Related or other events (month): * U.S.- supported Cuban exiles invade 
Cuba at the Bay of Pigs (Apr.); 
* Fidel Castro declares, "I am a Marxist-Leninist, and will be one 
until the last day of my life" (Dec.) 

Year: 1962; 
Key events/changes (month): United States declares almost total embargo 
on Cuba (Feb.); 
Related or other events (month): 
* Organization of American States (OAS) suspends Cuba (Jan.); 
* OFAC issues Cuban Import Regulations (Feb.); 
* Cuban missile crisis (Oct.- Nov.) 

Year: 1963; 
Key events/changes (month): OFAC issues CACR (July); 
Related or other events (month): 
* CACR prohibit travel to Cuba and make financial and commercial 
transactions with Cuba illegal; 
* United States freezes all Cuban-owned assets in the United States 
(July). 

Year: 1964; 
Key events/changes (month): OAS members support U.S. embargo (July); 
Related or other events (month): * OAS members vote to enact economic 
sanctions and break diplomatic relations with Cuba (July). 

Year: 1965; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* First Cuban boatlift (Oct.); 
* Start of Freedom Flights program, which allows 250,000 Cubans to come 
to the United States by 1971 (Nov.) 

Year: 1966; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* Cuban Adjustment Act allows 123,000 Cubans to apply for permanent 
U.S. residency (Nov.) 

Year: 1972; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* Cuba joins the Council for Mutual Economic Assistance, the communist 
block trade association (July). 

Year: 1973; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* United States and Cuba sign antihighjacking agreement (Feb.); 
* Cuba sends 500 tank drivers to aid Syria during the Yom Kippur War 
(Oct.) 

Year: 1974; 
Key events/changes (month): U.S. and Cuban officials conduct secret 
normalization talks (Nov.); 
Related or other events (month): 
* Talks conducted by Assistant Secretary of State William Rogers and 
Assistant to the Secretary of State Lawrence Eagleburger; 
* Talks end over Cuban involvement in Angola. 

Year: 1975; 
Key events/changes (month): OAS members end support for the U.S. 
embargo (July); 
Related or other events (month): 
* United States welcomes the OAS vote and says it will open serious 
normalization talks with Cuba (July); 
* U.S. foreign subsidiaries permitted to trade with Cuba (Aug.); 
* Cuba starts deploying 35,000 combat troops to support Marxist regime 
in Angola (Oct.); 
* United States declares that Cuban involvement in Angola and support 
for the Puerto Rican independence movement end efforts to improve U.S.-
Cuban relations (Dec.) 

Year: 1977; 
Key events/changes (month): United States reduces restrictions on 
travel and remittances to Cuba (Mar.); 
Related or other events (month): 
* Remittances capped at $500 per quarter or $2,000 per year, limited to 
close relatives, and could be transferred via authorized remittances 
forwarders; 
* United States lifts Cuba travel ban and allows U.S. citizens to spend 
$100 on Cuban goods during visits (Mar.); 
* United States and Cuba sign agreements on fishing rights and maritime 
boundaries (Apr.); 
* United States and Cuba open interests sections in Havana and 
Washington, D.C., respectively (Sept.) 

Year: 1978; Key events/changes (month): Related or other events 
(month): 
* Cuba begins deploying 20,000 troops to Ethiopia (Jan.); 
* Anti-Castro Cuban exile groups bomb the Cuban Mission to the United 
Nations in New York and the Cuban Interests Section and the Soviet 
Mission in Washington, D.C. (Fall); 
* Cuban officials and a group of Cuban exiles known as the "Group of 
75" hold "Dialogue Talks". 

Year: 1979; 
Key events/changes (month): Cuban government authorizes family visits 
from the United States; 
Related or other events (month): 
* Cuban policy reflects 1978 "Dialogue Talks"; 
* Cuban-supported Sandinistas overthrow Nicaraguan government (July); 
* Soviet combat brigade reported in Cuba (Aug.) 

Year: 1980; 
Key events/changes (month): Mariel boatlift (Apr.-Sept.); Related or 
other events (month): 
* A total of about 125,000 Cubans flee to the United States from the 
Cuban port of Mariel; 
* U.S. and Cuban officials start discussions about repatriation of the 
Mariel refugees (Marielitos) (Dec.) 

Year: 1982; 
Key events/changes (month): United States designates Cuba a state 
sponsor of terrorism (Feb.) and restricts travel to Cuba (Apr.); 
Related or other events (month): 
* Citing Cuban support for the M-19 movement in Colombia, United States 
adds Cuba to list of countries supporting terrorism; 
* Designated state sponsors of terrorism are subject to strict export 
controls, including a ban on the export of arms-related technologies 
and a policy of denial for dual-use exports (dual-use items are 
technologies that have both military and civilian applications); 
* Financial transactions with state sponsors of terrorism are also 
restricted, and they are ineligible to receive U.S. economic 
assistance; 
* Many of these restrictions already applied to Cuba under the existing 
embargo at the time it was declared a state sponsor of terrorism 
(Feb.); 
* United States halts charter air service between Miami and Havana and 
effectively bans travel to Cuba by prohibiting monetary expenditures in 
Cuba by U.S. citizens (Apr.) 

Year: 1983; 
Key events/changes (month): Related or other events (month): * United 
States intervenes in Grenada (Oct.); 
* U.S. intervention follows leftist coup and discovery that Cubans are 
building an airstrip on the island that could be used for military 
aircraft. 

Year: 1984; 
Key events/changes (month): Related or other events (month): 
* United States and Cuba conclude migration pact (Dec.); 
* Cuba agrees to accept return of the Marielitos. 

Year: 1985; 
Key events/changes (month): Related or other events (month): * Radio 
Marti begins broadcasts to Cuba (May); 
* Cuban government immediately jams the signal and later suspends the 
1984 U.S.-Cuba immigration accord. 

Year: 1987; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* United States and Cuba conclude a new immigration accord that 
reinstates the 1984 agreement (Nov.) 

Year: 1988; 
Key events/changes (month): OFAC changes some travel and import 
licensing rules; 
Related or other events (month): 
* New licensing system instituted for travel service providers and 
agencies forwarding remittances to Cuba; 
* Licensing requirements ended for importing recordings, printed 
materials, and other media from Cuba (Aug.) 

Year: 1989; 
Key events/changes (month): OFAC limits travel-related expenses for 
U.S. citizens to $100 per day (Nov.); 
Related or other events (month): [Empty]. 

Year: 1990; 
Key events/changes (month): [Empty]; 
Related or other events (month): 
* TV Marti begins broadcasts to Cuba (Mar.); 
* Cuban government immediately jams the signal. 

Year: 1991; 
Key events/changes (month): OFAC changes embargo rules to permit 
remittances of $300 per quarter to close family (Oct.); 
Related or other events (month): 
* Meeting with Cuban dissidents, the President calls on Cuba to release 
political prisoners and hold elections (May); 
* Soviet President Gorbachev says the Soviet Union will withdraw all 
its troops from Cuba (Sept.); 
* Soviet Union terminates economic subsides for Cuba worth $6 billion 
annually (Dec.) 

Year: 1992; 
Key events/changes (month): Congress enacts the Cuban Democracy Act 
(Oct.); 
Related or other events (month): 
; 
* Intended to support democracy in Cuba by restricting U.S. trade with 
the Cuban government and encouraging other countries to limit their 
trade; 
* Permitted U.S. exports of medicine and medical supplies to 
individuals, nongovernmental organizations, and private businesses in 
Cuba; 
* Law required (1) exporters to obtain a specific license for such 
items and (2) State to conduct onsite inspections of Cuban end-users to 
ensure that the items benefited the Cuban people; 
* Restricted trade with Cuba by foreign subsidiaries of U.S. firms and 
prohibited any vessel that had traded in Cuban ports from loading or 
unloading freight in U.S. ports for 180 days except pursuant to a 
Treasury license. 

Year: 1994; 
Key events/changes (month): United States bans remittances to Cuba and 
tightens travel restrictions (Aug.); 
Related or other events (month): 
* Ban permits remittances for extreme humanitarian cases; 
new rules replace general license for travel and remittances with a 
specific licensing requirement; 
* Cuba declares open immigration policy; 
new boatlift begins when 30,000 refugees set sail for the United States 
(Aug.); 
* United States and Cuba issue joint communiquï¿½ on migration; 
United States agrees to accept a minimum of 20,000 Cuba migrants per 
year (Sept.) 

Year: 1995; 
Key events/changes (month): United States lifts ban on transactions for 
permanent news bureaus in Cuba and some travel restrictions (Oct.); 
Related or other events (month): 
* Cuban government introduces the "convertible peso"; 
* U.S.-Cuba joint statement on 1994 migration accord provide for the 
return of Cubans to Cuba (May); 
* Deputy Assistant Secretary of State for American Affairs becomes the 
highest ranking U.S. official to visit Cuba in more than a decade 
(July). 

Year: 1996; 
Key events/changes (month): Congress enacts the Cuban Liberty and 
Democratic Solidarity (LIBERTAD) Act, also known as Helms- Burton 
(Mar.); 
European Union (EU) adopts the Common Position on Cuba, conditioning 
full cooperation with Cuba in the opening of the Cuban economy on 
improvements in human rights and political freedom (Dec.); 
Related or other events (month): 
* The President suspends all direct flights between the United States 
and Cuba after the Cuban Air Force shoots down two civilian aircraft, 
killing four members of Brothers to the Rescue (Hermanos al Rescate), a 
Miami-based Cuban exile group (Feb.); 
* Title II codifies the CACR and allows the President to suspend the 
embargo only if he determines that a transition government is in power 
in Cuba; 
* Title III of the law also permits U.S. nationals to sue in U.S. 
federal court persons trafficking in property seized by the Cuban 
government (the President has the authority to suspend this provision 
to promote the transition to democracy in Cuba; since the law was 
enacted, the provision has been suspended at 6-month intervals); 
* Title IV of the law denies entry into the United States to foreigners 
involved in the trafficking of seized property, as well as to their 
immediate family members. 

Year: 1997; Key events/changes (month): OFAC approves licenses for U.S. 
news organizations to open bureaus in Cuba (Feb.); 
U.S.-EU Understanding on Cuba (Apr.); 
Related or other events (month): 
* EU agrees to suspend its World Trade Organization case against the 
Helms- Burton Act; 
* United States and EU agree to work together to develop binding 
measures to deter investment in confiscated property, and the United 
States agrees to use the Presidential waiver for Title III of Helms-
Burton. 

Year: 1998; 
Key events/changes (month): United States relaxes restrictions on 
travel and remittances; 
Related or other events (month): 
* Direct flights to Cuba resumed; 
* Remittances allowed under general license; 
* Research-related travel, people-to-people exchanges, and travel for 
religious or cultural purposes expanded. 

Year: 1999; 
Key events/changes (month): OFAC amends CACR travel rules; 
Related or other events (month): 
* Significantly expands travel licensing. 

Year: 2000; 
Key events/changes (month): Congress enacts the Trade Sanctions and 
Export Enhancement Act of 2000 (TSRA); 
Related or other events (month): 
* Permits the commercial export of food, agricultural commodities, and 
medical products to Cuban government importers; 
* Prior to TSRA, Cuba's socialist economy provided limited 
opportunities for U.S. exports to individuals, nongovernmental 
organizations, and private business, as provided under the Cuban 
Democracy Act; 
* The legislation was introduced in Congress after lobbying by farm 
groups and agribusiness firms affected by declining agricultural 
exports and lower commodity prices in the late 1990s. 

Year: 2001; 
Key events/changes (month): OFAC and BIS introduce rule changes to 
implement TSRA; Related or other events (month): *[Empty]. 

Year: 2003; 
Key events/changes (month): OFAC loosens some restrictions on travel 
and remittances (Mar.); 
The President directs DHS to enforce the embargo more strictly and 
establishes CAFC (Oct.); 
Related or other events (month): 
* Regulations amended to allow travel beyond circumstances of 
humanitarian need and increase the amount of cash that travelers were 
permitted to carry from $300 to $3,000 (Mar.); 
* Cuban government arrests 75 leading dissidents, who are tried, 
convicted, and sentenced to between 6 and 28 years in prison (Mar.) 

Year: 2004; 
Key events/changes (month): President announces new restrictions on 
travel, remittances, and gifts (May); 
Related or other events (month): 
* President endorses first CAFC report, which, among other things, 
recommends tightening restrictions on travel, remittances, and gifts to 
Cuba; 
* OFAC issues new rules restricting travel, remittances, and gifts to 
Cuba (June); 
* U.S. Coast Guard issues new rules for vessels traveling to Cuba 
(July). 

Year: 2005; 
Key events/changes (month): OFAC issues clarification of cash-in-
advance rule; 
Related or other events (month): 
* Clarifies cash-in-advance to mean U.S. sellers must receive payment 
before shipments depart U.S. ports. 

Year: 2006; 
Key events/changes (month): Second CAFC report issued (July); 
Related or other events (month): 
* President endorses second CAFC report, which, among other things, 
recommends additional measures for tightening restrictions on travel, 
remittances, and gifts to Cuba. 

Source: GAO analysis of U.S. agency and other records. 

Notes: 

CACR = Cuban Asset Control Regulations: 
CAFC = Commission for Assistance to a Free Cuba: 
EU = European Union: 
OAS = Organization of American States: 
OFAC = Office of Foreign Assets Control: 
TSRA = Trade Sanctions Reform and Export Enhancement Act of 2000: 

[End of table] 

[End of section] 

Appendix III: U.S. Sanctions on Cuba and Other Countries: 

U.S. sanctions include, among others, those related to narcotics 
trafficking, the proliferation of weapons of mass destruction, and 
support for terrorism. The embargo on Cuba is the most comprehensive 
set of U.S. sanctions on any country, including the other countries 
designated by the U.S. government to be state sponsors of terrorism-- 
Iran, North Korea, Sudan, and Syria. For example, whereas all travel to 
Cuba must be licensed, U.S. persons may travel to any of the other four 
countries without a license. The amount of money that U.S. travelers 
may spend per day in Cuba is limited, but there are no restrictions on 
travelers' spending in other sanctioned countries. The frequency, 
quantity, and recipients of remittances to Cuba are regulated; 
unlimited personal remittances may be sent to other sanctioned 
countries. No imports are permitted from Cuba other than informational 
materials; import exceptions for gifts valued up to $100 exist for Iran 
and Sudan, while all imports from North Korea are subject to U.S. 
government approval. For all five countries, exports of military 
technologies are statutorily prohibited and exports of dual-use 
technologies--that is, items with both military and civilian 
application--are subject to a licensing policy of denial. Table 9 
compares U.S. sanctions on Cuba, Iran, North Korea, Sudan, and Syria. 

Table 9: Comparison of U.S. Sanctions on Cuba, Iran, North Korea, 
Sudan, and Syria: 

Types of transactions: Travel; 
Sanctioned country: Cuba: Travel prohibited except as authorized by 
Treasury license; 
Sanctioned country: Iran: No license needed for travel; 
Sanctioned country: North Korea: No license needed for travel; 
Sanctioned country: Sudan: No license needed for travel; 
Sanctioned country: Syria: No license needed for travel. 

Types of transactions: Travel; 
Sanctioned country: Cuba: Family travelers limited to $50 spending per 
day for food and lodging expenses; 
Sanctioned country: Iran: Travelers may engage in transactions 
ordinarily incident to travel and maintenance; 
Sanctioned country: North Korea: Travelers may engage in transactions 
ordinarily incident to travel and maintenance. 
U.S. firms may organize group travel to North Korea and transact 
business with North Korean carriers; 
Sanctioned country: Sudan: Prohibitions on transportation-related 
transactions involving Sudan; 
Sanctioned country: Syria: See note a. 

Types of transactions: Remittances: Restrictions on senders; Sanctioned 
country: Cuba: Limited remittances to immediate family only (no more 
than $300 per household in any 3-month period); 
Sanctioned country: Iran: Unlimited personal remittances are permitted; 
Sanctioned country: North Korea: Unlimited personal remittances are 
permitted; 
Sanctioned country: Sudan: Unlimited personal remittances are 
permitted; 
Sanctioned country: Syria: See note a. 

Types of transactions: Remittances: Restrictions on financial 
institutions and forwarders; 
Sanctioned country: Cuba: Remittances: For transactions within the 
United States, funds must be transferred by Treasury-licensed 
remittance forwarders; 
Sanctioned country: Iran: Remittances: Funds may be transferred by U.S. 
banks provided they are routed through non-U.S., non-Iranian offshore 
banks; 
Sanctioned country: North Korea: Remittances: Restrictions on payments 
and transfers to and from blocked accounts in U.S. financial 
institutions; 
Sanctioned country: Sudan: Remittances: Funds may be transferred 
through institutions not controlled by the Sudanese government, 
including U.S. banks and money service businesses; 
Sanctioned country: Syria: Remittances: See note a. 

Types of transactions: Remittances: Imports; 
Sanctioned country: Cuba: Remittances: Imports prohibited except for 
informational materials; 
No person subject to U.S. jurisdiction may deal in any property in 
which Cuba or a Cuban national has an interest; 
Sanctioned country: Iran: Remittances: Imports prohibited except gifts 
valued at $100 or less, information or informational materials, 
foodstuffs intended for human consumption, and carpets and other 
textile floor coverings; 
Sanctioned country: North Korea: Remittances: Imports must be approved 
by OFAC, which reviews information about whether the product was 
produced by foreign persons or the North Korean government or affects 
the development or production of sensitive technology; 
Sanctioned country: Sudan: Remittances: Imports prohibited except 
merchandise or gifts up to $100 in value, informational materials, 
goods containing components of Sudanese origin incorporated into 
manufactured products or substantially transformed in a third country; 
Sanctioned country: Syria: Remittances: See note a. 

Types of transactions: Exports: Items on the Commerce control list; 
Sanctioned country: Cuba: Exports: Subject to a policy of denial except 
when authorized by law; 
Sanctioned country: Iran: Exports: Subject to a policy of denial except 
when authorized by law; 
Sanctioned country: North Korea: Exports: Most items subject to a 
policy of denial except when authorized by law; 
Sanctioned country: Sudan: Exports: Most items require a license and 
are subject to a policy of denial except when authorized by law; 
Sanctioned country: Syria: Exports: All items subject to a policy of 
denial; some medical and telecommunications items reviewed on a case-by-
case basis. 

Types of transactions: Exports: Items subject to export administration 
rules but not on the Commerce control list (EAR99); 
Sanctioned country: Cuba: Exports: Must be licensed; 
Sanctioned country: Iran: Exports: Must be licensed; 
Sanctioned country: North Korea: Exports: Food and medicine classified 
as EAR99 do not require a license; 
Sanctioned country: Sudan: Exports: Must be licensed; 
Sanctioned country: Syria: Exports: License required except for food 
and medicines that are EAR99; all items subject to a policy of denial. 

Types of transactions: Exports: Foreign subsidiaries of U.S. firms; 
Sanctioned country: Cuba: Exports: Foreign subsidiaries subject to 
regulations; 
Sanctioned country: Iran: Exports: Foreign subsidiaries subject to 
regulations; 
Sanctioned country: North Korea: Exports: Foreign subsidiaries subject 
to regulations; 
Sanctioned country: Sudan: Exports: Foreign subsidiaries subject to 
regulations; 
Sanctioned country: Syria: Exports: See note a. 

Types of transactions: Exports: Re-exports; 
Sanctioned country: Cuba: Exports: Generally prohibited; 
Sanctioned country: Iran: Exports: Foreign persons may re- export EAR99 
items; 
Sanctioned country: North Korea: Exports: Generally prohibited; 
Sanctioned country: Sudan: Exports: Generally prohibited; 
Sanctioned country: Syria: Exports: Generally prohibited. 

Types of transactions: Exports: Exceptions; 
Sanctioned country: Cuba: Exports: Informational materials. 
TSRA-eligible agricultural commodities (with license). 
Medicine and medical devices (with license). 
Donated humanitarian items (food and medicine); 
Sanctioned country: Iran: Exports: Informational materials. 
TSRA-eligible agricultural commodities (with license). 
Medicine and medical devices (with license). 
Donated humanitarian items (food, clothing, and medicine). 
Gifts valued at $100 or less; 
Sanctioned country: North Korea: Exports: Some EAR99 items, such as 
food and medicine, can be exported without a license; 
Sanctioned country: Sudan: Exports: Informational materials. 
TSRA- eligible agricultural commodities (with license). 
Medicine and medical devices (with license). 
Donated humanitarian items (food, clothing, and medicine); 
Sanctioned country: Syria: Exports: Informational materials. 
Food. 
Medicine. 
Publicly available software and technology. 

Types of transactions: Exports: Financing of authorized exports; 
Sanctioned country: Cuba: Exports: For TSRA-eligible items: (1) cash in 
advance or (2) via third-country financial institutions (excluding U.S. 
persons or Cuban government of entities). 
Financing and incidental transactions for non-TSRA-eligible items 
authorized under a general license for Commerce-approved exports; 
Sanctioned country: Iran: Exports: Cash in advance. 
Sales on open account (provided the account receivable is not 
transferred by the person extending the credit). 
Via third- country financial institutions that are neither U.S. persons 
nor Iranian government entities; 
Sanctioned country: North Korea: Exports: Some transactions with U.S. 
financial institutions are permitted; 
Sanctioned country: Sudan: Exports: Cash in advance. 
Sales on open account (provided the account receivable is not 
transferred by the person extending the credit). 
Via third-country financial institutions that are neither U.S. persons 
nor Sudanese government entities; 
Sanctioned country: Syria: Exports: See note a. 

Source: GAO analysis of U.S. agency records, the Federal Register, the 
Code of Federal Regulations, and other records. 

[A] Not explicitly addressed or unable to determine or summarize. 
Treasury did not provide additional information in technical comments 
on our report. 

[End of table] 

[End of section] 

Appendix IV: OFAC Investigations and Civil Penalties for Violations of 
the Cuba Embargo and Other Sanctions Programs, 2000-2006: 

Table 10: OFAC Investigations of Suspected Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

Enforcement cases opened: Cuba; 
2000: 1,753; 
2001: 2,115; 
2002: 1,844; 
2003: 1,246; 
2004: 1,239; 
2005: 1,028; 
2006: 1,598; 
2000-2006: 10,823; 
Percentage: 61. 

Enforcement cases opened: Other sanctions programs; 
2000: 1,005; 
2001: 1,223; 
2002: 854; 
2003: 715; 
2004: 926; 
2005: 924; 
2006: 1,144; 
2000- 2006: 6,791; 
Percentage: 39. 

Total; 
2000: 2,758; 
2001: 3,338; 
2002: 2,698; 
2003: 1,961; 
2004: 2,165; 
2005: 1,952; 
2006: 2,742; 
2000-2006: 17,614; 
Percentage: 100.0. 

[End of table] 

Source: GAO analysis of Treasury (OFAC) data. 

Table 11: OFAC Penalty Cases and Fines for Violations of the Cuba 
Embargo and Other Sanctions Programs, 2000-2006: 

Cuba: Actions; 
2000: 557; 
2001: 710; 
2002: 1,343; 
2003: 838; 
2004: 2,937; 
2005: 1,495; 
2006: 290; 
2000-2006: 8,170; 
Percentage: 73. 

Cuba: Collections; 
2000: 907,802; 
2001: 1,981,914; 
2002: 1,202,093; 
2003: 790,183; 
2004: 1,706,008; 
2005: 1,282,757; 
2006: 233,446; 
2000-2006: 8,104,203; 
Percentage: 39. 

Cuba: Average collections; 
2000: 1,630; 
2001: 2,791; 
2002: 895; 
2003: 943; 
2004: 581; 
2005: 858; 
2006: 805; 
2000-2006: 992; 
Percentage: --. 

Other: Actions; 
2000: 233; 
2001: 239; 
2002: 177; 
2003: 207; 
2004: 919; 
2005: 554; 
2006: 725; 
2000-2006: 3,054; 
Percentage: 27. 

Other: Collections; 
2000: 2,340,706; 
2001: 3,449,598; 
2002: 1,098,954; 
2003: 971,868; 
2004: 1,416,976; 
2005: 931,341; 
2006: 2,222,675; 
2000-2006: 12,432,118; 
Percentage: 61. 

Other: Average collection; 
2000: 10,045; 
2001: 14,433; 
2002: 6,209; 
2003: 4,695; 
2004: 1,542; 
2005: 1,681; 
2006: 3,066; 
2000-2006: 4,071; 
Percentage: --. 

Total: Actions; 
2000: 790; 
2001: 949; 
2002: 1,520; 
2003: 1,045; 
2004: 3,856; 
2005: 2,049; 
2006: 1,015; 
2000-2006: 11,224; 
Percentage: 100. 

Total: Collections; 
2000: 3,248,508; 
2001: 5,431,512; 
2002: 2,301,047; 
2003: 1,762,051; 
2004: 3,122,984; 
2005: 2,214,098; 
2006: 2,456,121; 
2000- 2006: 20,536,321; 
Percentage: 100. 

Source: GAO analysis of Treasury (OFAC) data. 

Note: Collections and average collections are expressed in dollars. 

[End of table] 

[End of section] 

Appendix V: Results of Votes in the UN General Assembly on Resolutions 
Calling for an End to the U.S. Embargo on Cuba: 

Table 12: Results of Votes in the UN General Assembly on Resolutions 
Calling for an End to the U.S. Embargo on Cuba, 1992-2007: 

Year (General Assembly session): 2007; (62nd); 
Number of member states: Voting for the resolution: 184; 
Number of member states: Number of member states: Voting against the 
resolution: (member states): 4; (United States, Israel, Marshall 
Islands, Palau); 
Number of member states: Abstaining from the vote (member states): 1; 
(Micronesia); 
Number of member states: Absent from the vote: (member states): 3; 
(Albania, El Salvador, Iraq). 

Year (General Assembly session): 2006; (61st); 
Number of member states: Voting for the resolution: 183; 
Number of member states: Voting against the resolution: (member 
states): 4; (United States, Israel, Marshall Islands, Palau); 
Number of member states: Abstaining from the vote (member states): 1; 
(Micronesia); 
Number of member states: Absent from the vote: (member states): 4; 
(Cï¿½te d'Ivoire, El Salvador, Iraq, Nicaragua). 

Year (General Assembly session): 2005; (60th); 
Number of member states: Voting for the resolution: 182; 
Number of member states: Voting against the resolution: (member 
states): 4; (United States, Israel, Marshall Islands, Palau); 
Number of member states: Abstaining from the vote (member states): 1; 
(Micronesia); 
Number of member states: Absent from the vote: (member states): 4; (El 
Salvador, Iraq, Morocco, Nicaragua). 

Year (General Assembly session): 2004; (59th); 
Number of member states: Voting for the resolution: 179; 
Number of member states: Voting against the resolution: (member 
states): 4; (United States, Israel, Marshall Islands, Palau); 
Number of member states: Abstaining from the vote (member states): 1; 
(Micronesia); 
Number of member states: Absent from the vote: (member states): 6; (El 
Salvador, Iraq, Morocco, Nicaragua, Uzbekistan, Vanuatu). 

Year (General Assembly session): 2003; (58th); 
Number of member states: Voting for the resolution: 179; 
Number of member states: Voting against the resolution: (member 
states): 3; (United States, Israel, Marshall Islands); 
Number of member states: Abstaining from the vote (member states): 2; 
(Morocco, Micronesia); 
Number of member states: Absent from the vote: (member states): 7; (El 
Salvador, Iraq, Kuwait, Liberia, Nicaragua, Palau, Uzbekistan). 

Year (General Assembly session): 2002; (57th); 
Number of member states: Voting for the resolution: 173; 
Number of member states: Voting against the resolution: (member 
states): 3; (United States, Israel, Marshall Islands); 
Number of member states: Abstaining from the vote (member states): 4; 
(Ethiopia, Malawi, Nicaragua, Uzbekistan); 
Number of member states: Absent from the vote: (member states): 7; 
(Cï¿½te d'Ivoire, El Salvador, Kiribati, Madagascar, Micronesia, Morocco, 
Palau). 

Year (General Assembly session): 2001; (56th); 
Number of member states: Voting for the resolution: 167; 
Number of member states: Voting against the resolution: (member 
states): 3; (United States, Israel, Marshall Islands); 
Number of member states: Abstaining from the vote (member states): 3; 
(Micronesia, Latvia, Nicaragua); 
Number of member states: Absent from the vote: (member states): 6; 
(Bosnia and Herzegovina, El Salvador, Kiribati, Morocco, Palau, Solomon 
Islands). 

Year (General Assembly session): 2000; (55th); 
Number of member states: Voting for the resolution: 167; 
Number of member states: Voting against the resolution: (member 
states): 3; (United States, Israel, Marshall Islands); 
Number of member states: Abstaining from the vote (member states): 4; 
(El Salvador, Latvia, Morocco, Nicaragua); 
Number of member states: Absent from the vote: (member states): 7; 
(Bosnia and Herzegovina, Estonia, Micronesia, Kiribati, Palau, Tuvalu, 
Uzbekistan). 

Year (General Assembly session): 1999; (54th); 
Number of member states: Voting for the resolution: 155; 
Number of member states: Voting against the resolution: (member 
states): 2; (United States, Israel); 
Number of member states: Abstaining from the vote (member states): 8; 
(Estonia, Micronesia,Georgia, Latvia, Morocco, Nicaragua, Senegal, 
Uzbekistan); 
Number of member states: Absent from the vote: (member states): 12; 
(Albania, Bosnia and Herzegovina, Cameroon, El Salvador, Kiribati, 
Marshall Islands, Nauru, Oman, Palau, Saint Vincent and the Grenadines, 
Saudi Arabia, Tonga). 

Year (General Assembly session): 1998; (53rd); 
Number of member states: Voting for the resolution: 157; 
Number of member states: Voting against the resolution: (member 
states): 2; (United States, Israel); 
Number of member states: Abstaining from the vote (member states): 12; 
(El Salvador, Estonia, Georgia, Latvia, Lithuania, Morocco, Nepal, 
Nicaragua, Republic of Korea, Senegal, Macedonia, Uzbekistan); Number 
of member states: Absent from the vote: (member states): 6; (Albania, 
Micronesia, Kuwait, Marshall Islands, Oman, Palau). 

Year (General Assembly session): 1997; (52nd); 
Number of member states: Voting for the resolution: 143; 
Number of member states: Voting against the resolution: (member 
states): 3; (United States, Israel, Uzbekistan); 
Number of member states: Abstaining from the vote (member states): 17; 
(Estonia, Georgia, Kuwait, Latvia, Liberia, Lithuania, Morocco, Nepal, 
Oman, Republic of Korea, Moldova, Romania, Rwanda, Saudi Arabia, 
Senegal, Tajikistan, Macedonia); 
Number of member states: Absent from the vote: (member states): 15; 
(Azerbaijan, Bahrain, Cambodia, Comoros, Democratic Republic of Congo, 
Egypt, El Salvador, Micronesia, Gabon, Marshall Islands, Nicaragua, 
Palau, Seychelles, Turkmenistan, United Arab Emirates). 

Year (General Assembly session): 1996; (51st); 
Number of member states: Voting for the resolution: 137; 
Number of member states: Voting against the resolution: (member 
states): 3; 
Number of member states: Abstaining from the vote (member states): 25; 
Number of member states: Absent from the vote: (member states): --. 

Year (General Assembly session): 1995; (50th); 
Number of member states: Voting for the resolution: 117; 
Number of member states: Voting against the resolution: (member 
states): 3; 
Number of member states: Abstaining from the vote (member states): 38; 
Number of member states: Absent from the vote: (member states): --. 

Year (General Assembly session): 1994; (49th); 
Number of member states: Voting for the resolution: 101; 
Number of member states: Voting against the resolution: (member 
states): 2; 
Number of member states: Abstaining from the vote (member states): 48; 
Number of member states: Absent from the vote: (member states): --. 

Year (General Assembly session): 1993; (48th); 
Number of member states: Voting for the resolution: 88; 
Number of member states: [Empty]; 
Number of member states: Voting against the resolution: (member 
states): 4; 
Number of member states: Abstaining from the vote (member states): 57; 
Number of member states: Absent from the vote: (member states): --. 

Year (General Assembly session): 1992; (47th); 
Number of member states: Voting for the resolution: 59; 
Number of member states: Voting against the resolution: (member 
states): 3; 
Number of member states: Abstaining from the vote (member states): 71; 
Number of member states: Absent from the vote: (member states): --. 

Source: GAO analysis of UN General Assembly records. 

Note: Information about specific member states voting for or against UN 
General Assembly resolutions or abstaining or absent from such votes is 
not readily available prior to 1997. 

[End of table] 

[End of section] 

Appendix VI: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 
[hyperlink, http://www.dhs.gov] 

Homeland Security: 

November 9, 2007: 

Mr. David Gootnick: 
Director, International Affairs and Trade: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Gootnick: 

RE: Draft Report GAO-08-80, Economic Sanctions: Agencies Face Competing 
Priorities in Enforcing the U.S. Embargo against Cuba (GAO Job Code 
320468): 

The Department of Homeland Security appreciates the opportunity to 
review and comment on the draft report referenced above that addresses 
United States agencies' embargo-related activities and workloads, as 
well as factors affecting the embargo's enforcement. The Government 
Accountability Office (GAO) recommends that the U.S. Customs and Border 
Protection (CBP), a component of DHS, use a risk based approach to 
allocate limited inspection staff and other resources at the Miami 
International Airport (MIA). CBP officials agree with the intent of the 
recommendation but believe it is not warranted because CBP has 
historically taken and continues to take such an approach. 

GAO correctly notes that CBP inspects all exports to Cuba at Port 
Everglades and all passengers arriving from Cuba at the MIA. All 
arriving international passengers are inspected, regardless of 
nationality or country of origin. All cargo export manifests can be 
reviewed regardless of destination. CBP officials however dispute the 
assertion that "these inspections, unlike CBP's inspections of all 
other exports and arriving passengers, are not based on the risk these 
exports and passengers pose to U.S. homeland or national security and, 
at the Miami International Airport, divert resources from risk based 
inspections of other arriving passengers." Based on a twelve month 
Fiscal Year 2007 statistical sample pulled from the Automated Targeting 
System (ATS), CBP has demonstrated that approximately 20.3% of 
passengers arriving at MIA from Cuba were referred for further 
examination. This compares to approximately 3.37% of all arriving 
international passengers to MIA from countries other than Cuba. 

MIA personnel utilize risk analysis and risk management principles 
(e.g., collect data and information, analyze and assess risk, prescribe 
action, and track and report results/ outcomes) to identify criteria 
and targets via systems such as the ATS in order to appropriately 
assign and allocate inspectional staff and resources on a daily basis. 
Risk management principles are taught to CBP officers starting at the 
CBP Academy, and are continuously reinforced by management at the MIA. 
These principles were referenced in written answers to several GAO 
questions raised in August about inspections of in-bound flights from 
Cuba and other places. 

We also want to separately emphasize that personnel in the outbound 
unit at Port Everglades utilize risk management concepts and screen 
shipments for all countries, including Cuba. Risk management concepts 
and principles are used throughout the cargo and passenger environments 
according to CBP guidelines. 

CBP officials in responding to GAO questions in August also commented 
that inspections of flights from other countries did not decrease as 
resources were used to inspect more inbound flights from Cuba. CBP has 
maintained a consistent inspection of all flights. 

Technical comments have been provided under separate cover. 

Sincerely,

Signed by: 

Michael E. McPoland: 

for: 

Steven J. Pecinovsky: 
Director: 
Departmental GAO/OIG Liaison Office: 
 
[End of figure] 

[End of section] 

Appendix VII: Comments from the Department of the Treasury: 

Department Of The Treasury: 
Washington, D.C. 20220: 

November 9, 2007: 

FAC No. CU-379305: 

David Gootnick: 
Director: 
International Affairs and Trade: 
U.S. Government Accountability Office: 
44 G Street, N.W.: 
Washington, D.C. 20548: 

Dear Mr. Gootnick: 

This responds to your electronic transmission of October 17, 2007, to 
the U.S. Department of the Treasury ("Treasury") attaching ,a copy of 
the draft report entitled: Economic Sanctions: Agencies Face Competing 
Priorities in Enforcing the U.S. Embargo against Cuba (GAO-08-80). We 
have reviewed the portions of the report pertaining to matters 
administered by the Office of Foreign Assets Control ("OFAC"). We are 
providing the following comments regarding the recommendation of the 
Government Accountability Office ("GAO") that the Secretary of the 
Treasury direct OFAC to assess whether its allocation of resources for 
investigating and penalizing violations of the Cuba embargo is 
consistent with the risk that these violations pose to U.S. national 
security in light of what GAO views as OFAC's higher priority foreign 
policy and national security responsibilities. 

OFAC is responsible for administering over 20 sanctions programs 
imposed by the President and Congress, including those related to 
terrorism, proliferation of weapons of mass destruction, and narcotics 
trafficking, as well as sanctions with respect to Iran, Sudan, Burma 
and Cuba, among others. OFAC has an obligation to fairly enforce all 
the laws it is entrusted to implement. 

OFAC's resources are allocated according to its priorities and 
obligations as well as the volume of work generated, which differ based 
on the scope of the particular sanctions program. OFAC is organized in 
a manner that enables it to carry out its responsibilities as 
efficiently as possible in light of the different mandates of the 
various sanctions programs it administers. 

In administering these sanctions, it is important that Treasury not 
only enforce prohibitions but also authorize certain otherwise 
prohibited activities that are consistent with U.S. foreign policy. 
Indeed, most of OFAC's Cuba-related work is centered in its Licensing 
Division and involves responding to requests for guidance from the 
public and applications for licenses to engage in Cuba-related 
transactions. One example is the licensing of travel-related and other 
transactions incident to the marketing, sales negotiation, accompanied 
delivery or servicing of agricultural products exported to Cuba, as 
provided for by the Trade Sanctions Reform and Export Enhancement Act 
of 2000. Within OFAC's Enforcement Division, Cuba cases represent a 
much smaller portion of OFAC's enforcement workload than their numbers 
suggest. Not all enforcement cases require the same allocation of 
resources, as they differ by complexity and importance. For example, 
the majority of OFAC Enforcement's Cuba cases involve unlicensed travel 
and imports of Cuban cigars, which are relatively simple matters that 
require few agency resources compared to complex cases involving trade 
and finance. 

Estimating the overall impact of U.S. sanctions on Cuba is quite 
difficult, and OFAC does not have the ability to monitor the movement 
of all travelers and funds from the United States to Cuba. The number 
of enforcement actions against violators, moreover, is a limited 
measure of a sanction program's overall effectiveness because most 
compliance remains voluntary. 

Thank you for the opportunity to comment on the GAO's draft report. 

Sincerely,

Signed by: 

Adam Szubin:  
Director: 
Office of Foreign Assets Control: 

[End of section] 

Appendix VIII: Comments from the Department of State: 

United States Department of State: 
Assistant Secretary for Resource Management and Chief Financial 
Officer:  
Washington, D.C. 20520: 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W.: 
Washington, D.C. 20548-0001: 

November 2, 2007: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, "Economic 
Sanctions: Agencies Face Competing Priorities in Enforcing the U.S. 
Embargo against Cuba," GAO Job Code 320468. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact 
David McFarland, Economic Officer, Bureau of Western Hemisphere 
Affairs, Office of Cuban Affairs at (202) 647-5561. 

Sincerely, 

Signed by: 

Bradford R. Higgins: 

cc: GAO ï¿½ Michael Rohrback WHA ï¿½ Kirsten Madison: 
State/OIG ï¿½ Mark Duda: 
Department of State Comments on GAO Draft Report:  

Economic Sanctions: Agencies Face Competing Priorities in Enforcing the 
U.S. Embargo against Cuba (GAO-08-80, Job Code 320468) 

Thank you for allowing the Department of State the opportunity to 
comment on the draft report Economic Sanctions: Agencies Face Competing 
Priorities in Enforcing the US. Embargo against Cuba. 

The Department appreciates the professionalism with which the 
Government Accountability Office (GAO) staff conducted its research, 
data collection, and analysis over the past year and GAO's stated 
willingness to incorporate the Department's technical comments into the 
final report. 

The Department looks forward to a day when the Cuban government 
reflects the hopes and dreams of the Cuban people. Despite the best 
efforts of the Cuban government and its allies to try to shift 
attention to U.S. policy and to issues outside of Cuba, we believe it 
is essential that the focus remain on supporting a process of 
meaningful and enduring change in Cuba. At this moment, economic 
sanctions remain an essential part of the USG policy mix, and the 
Department is committed to working with other Federal agencies to this 
end. 

U.S. policy goals as recommended by the first and second reports of the 
Commission for Assistance to a Free Cuba remain clear: Encourage a 
rapid, peaceful transition to a democracy that is strongly supportive 
of fundamental political and economic freedoms. 

The Cuban regime is poised to capitalize on proceeds from any expansion 
of U.S.- origin trade and travel, which they actively seek. Loosening 
trade and travel restrictions, or limiting the ability to enforce them, 
would signal to the Cuban people that the United States had accepted 
the regime's public relations campaign, which sells the prospect of 
superficial changes as fundamental reform. Loosening the restrictions 
would also provide increased revenue to the successor dictatorship run 
by Raul Castro, and prolong of its tight control over all aspects of 
Cuban life. 

Eventually, U.S. economic engagement will help Cubans transform their 
country and be a critical factor in the recovery of Cuba's economy 
after decades of mismanagement. However, economic engagement will only 
have positive impact when the totalitarian state is dismantled, and 
Cubans are free to speak their minds, to own businesses, and to elect 
their leaders. 

In the meantime, the American people are the largest providers of 
humanitarian aid to the Cuban people in the world. The Department was 
pleased to note specific reference to this in the GAO's report. In 
2006, the United States Government authorized more than $270 million in 
private humanitarian assistance, in the form of gift parcels, non-
agricultural humanitarian donations, and medical donations. The United 
States Government also authorized sales to Cuba of agricultural, 
medical and other necessary goods totaling nearly $350 million in 2006, 
facilitated and authorized by the U.S. Government interagency process 
described in this report. 

We appreciate the careful record of the history of sanctions laws and 
regulations the GAO produced as part of this helpful reference 
resource. The Department will continue to work with other federal 
agencies to ensure that, as directed by sanctions laws and regulations, 
the United States remains the strongest supporter of the Cuban people.

[End of section] 

Appendix IX: Comments from the Department of Commerce: 

The Secretary Of Commerce: 
Washington, D.C. 20230: 

November 1, 2007: 

Mr. David B. Gootnick: 
Director, International Affairs and Trade: 
Government Accountability Office: 
441 G Street, NW, 4T55: 
Washington, DC 20548: 

Dear Mr. Gootnick: 

Thank you for the opportunity to comment on the Government 
Accountability Office's draft report entitled, Economic Sanctions: 
Agencies Face Competing Priorities in Enforcing the U.S. Embargo 
against Cuba, GAO-08-80. 

I enclose the Department of Commerce's comments. 

Sincerely,

Signed by: 

Carlos M. Gutierrez: 

Enclosure: 

U.S. Department of Commerce Comments on Economic Sanctions: Agencies 
Face Competing Priorities in Enforcing the U.S. Embargo against Cuba 
GAO-08-80: 

p. 33 Statement, "BIS officials estimate that the eight licensing 
officers in the Foreign Policy Division of its Office of 
Nonproliferation and Treaty Compliance spend about 25 percent of their 
time processing applications for Cuba export licenses." 

This statement does not accurately characterize the Foreign Policy 
Division's available personnel resources or the percentage of time 
licensing officers spend processing Cuba export licenses. The 
equivalents of two licensing officers are dedicated full-time to 
processing Cuba export licenses. By means of clarification, BIS 
officials estimate that the five licensing officers in the Foreign 
Policy Division of the Office of Nonproliferation and Treaty Compliance 
spend about 40 percent of their time processing applications for Cuba 
export licenses. 

p. 41 Statement, "According the BIS officials, the agency devotes few 
resources to Cuba-embargo-related investigations: at the end of 
February 2007, BIS reported a total of 701 open enforcement cases 
nationwide, of which less than 4 percent (25) involved the Cuba 
embargo." 

GAO asked for the most recent statistics. As of October 17, 2007, BIS 
has 785 open enforcement cases nationwide, of which 26 are Cuba-embargo 
cases.

[End of section] 

Appendix X: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David Gootnick, (202) 512-3149 or g [Hyperlink, [email protected]] 
[Hyperlink, [email protected]] [email protected]: 

Staff Acknowledgments: 

In addition to the contact named above, Virginia Hughes, Michael 
Rohrback, Francisco Enriquez, Reid Lowe, and Sandra Moore made key 
contributions to this report. 

[End of section] 

Footnotes:  

[1] 31 C.F.R. pt. 515. 

[2] The principal entities implementing and enforcing the embargo are 
the Department of Commerce's Bureau of Industry and Security; DHS's 
U.S. Customs and Border Protection, U.S. Immigration and Customs 
Enforcement, and U.S. Coast Guard; the Department of Justice's U.S. 
Attorneys and Federal Bureau of Investigation; and the Department of 
Treasury's OFAC. In addition, State, Defense, and other departments, as 
appropriate, assist in making some licensing decisions. In this report, 
we refer to all of these entities as "agencies." 

[3] Risk management is a systematic process for analyzing threats, 
vulnerabilities, and consequences, as well as the criticality (or 
relative importance) of assets to support key decisions linking 
resources with priorities. [For example, see GAO, Risk Management: 
Further Refinements Needed to Assess Risks and Prioritize Protective 
Measures at Ports and Other Critical Infrastructure, GAO-06-91 
(Washington, D.C.: Dec. 15, 2005) and GAO, Homeland Security: A Risk 
Management Approach Can Guide Preparedness Efforts, GAO-02-208T 
(Washington, D.C.: Oct. 31, 2001).] Managing homeland security efforts 
on the basis of risk has received widespread support from Congress, the 
President, senior agency officials, and others. For example, see the 
Office of Homeland Security's 2002 National Strategy for Homeland 
Security (available at [hyperlink, 
http://www.whitehouse.gov/homeland/book/ index.html]). 

[4] Agriculture, Rural Development, Food and Drug Administration, and 
Related Appropriations Act, Pub. L. 106-387, Title IX, 114 Stat. 1549A- 
67-1549A-72 (2000) (codified at 22 U.S.C. ï¿½ï¿½ 7201-7209). 

[5] The President established CAFC in October 2003 to identify (1) ways 
the U.S. government could hasten the end of the Castro dictatorship and 
(2) U.S. programs to assist the Cuban people during a transition to 
democracy. 

[6] Port Everglades is one of three ports handling the majority of U.S. 
exports to Cuba; Miami International Airport currently is the only U.S. 
airport with regular, direct service to Cuba. 

[7] According to agency officials, some license applications pose 
unusual or foreign policy issues; deciding these cases requires 
interagency analysis and discussion by senior agency officials. 

[8] The Cuban Democracy Act of 1992 mandated that Treasury establish 
and maintain an OFAC field office in Miami to strengthen enforcement 
(see 22 U.S.C. ï¿½6009). According to Treasury, the Miami field office 
was established in 1996 and, in complying with its mandate, the office 
has audited travel service providers, conducted public outreach to 
ensure that proper information about the embargo was provided to 
individuals and companies, and investigated suspected violations of the 
Cuba embargo. 

[9] Three U.S. ports handle the majority of exports to Cuba: Port 
Everglades (Ft. Lauderdale), Florida, which handles all container 
shipments, and New Orleans and Gramercy, Louisiana, which handle bulk 
shipments to the island. 

[10] Currently, Miami International Airport is the only U.S. airport 
with regular, direct flights to Cuba. 

[11] The inspections of arriving passengers and their baggage take 
place in three designated secondary examination areas at the airport 
and can involve x-ray and physical inspections of the baggage. 

[12] For example, see GAO, Border Security: Despite Progress, 
Weaknesses in Traveler Inspections Exist at Our Nation's Ports of 
Entry, GAO-08-219 (Washington D.C.: Nov. 5, 2007). 

[13] Treasury's OFAC administers and enforces more than 20 economic and 
trade sanctions programs based on U.S. foreign policy and national 
security goals against targeted foreign countries, terrorists, 
international narcotics traffickers, and those engaged in activities 
related to the proliferation of weapons of mass destruction. 

[14] In 2006, the U.S. Attorney's Office implemented a policy of 
considering for prosecution any embargo violation presented to it by an 
investigatory agency. The U.S. Attorney's Office in Miami recently 
secured convictions against four individuals who conspired to provide 
fraudulent religious licenses for more than 4,500 illegal trips to 
Cuba--the office's first embargo related-case in several years. 

[15] Central Intelligence Agency, The World Factbook 2007 (Washington, 
D.C., 2007). Estimate as of Oct. 18, 2007. State estimates per capita 
nominal GDP to be $3,300 to $3,400. 

[16] See, for example, GAO, Foreign Assistance: U.S. Democracy 
Assistance for Cuba Needs Better Management and Oversight, GAO-07-147 
(Washington, D.C.: Nov. 2006). 

[17] See 31 CFR pt. 515. The CACR replaced the Cuban Import 
Regulations, issued in 1962, which were less comprehensive. Treasury 
issued the CACR under the authority granted by the Trading with the 
Enemy Act of 1917 (see 50 U.S.C. app. ï¿½ 5(b)), which confers broad 
authority on the President to impose embargoes on foreign countries. 

[18] The President's declaration was authorized by the Foreign 
Assistance Act of 1961 (Pub. L. No. 87-195, 22 USC ï¿½ 2370), also known 
as the Act for International Development of 1961. Section 620(a) 
authorized the President "to establish and maintain a total embargo 
upon all trade between the United States and Cuba." 

[19] See 47 Federal Register 16623-01. "State sponsor of terrorism" is 
a designation applied by the Department of State to nations that are 
designated by the Secretary of State to have repeatedly provided 
support for acts of international terrorism. Inclusion on the list 
imposes strict sanctions. The list began on December 29, 1979, with 
Libya, Iraq, South Yemen, and Syria. Besides Cuba, currently there are 
four countries designated as state sponsors of terrorism: Iran, North 
Korea, Sudan, and Syria. See [hyperlink, 
http://www.state.gov/s/ct/c14151.htm]. 

[20] Under a policy of denial, agencies review export licensing 
applications with "a presumption of denial." To obtain a license for 
export, applicants must provide sufficient justification and evidence 
to overcome this presumption. In general, agencies review export 
licenses under a policy of (1) denial (presumption of denial), (2) case-
by-case review, or (3) approval (presumption of approval). 

[21] Dual-use items are technologies that have both military and 
civilian applications. 

[22] National Defense Authorization Act for Fiscal Year 1993, Pub. L. 
No. 102-484, Div. A, Title XVII, 106 Stat. 2572-81 (1992). 

[23] Pub. L. No. 104-114, 110 Stat. 785. 

[24] Section 102(h) of Helms-Burton states that "the economic embargo 
of Cuba, as in effect on March 1, 1996, including all restrictions 
under part 515 of title 31, Code of Federal Regulations, shall be in 
effect upon the enactment of this Act, and shall remain in effect, 
subject to section 204 of this Act." The conference report accompanying 
the act explains that section 102(h) was not intended to prohibit 
executive branch agencies from amending existing regulations to tighten 
economic sanctions on Cuba or to otherwise implement Helms-Burton. In 
addition, GAO previously has concluded that section 102(h) also does 
not prohibit OFAC from amending the CACR in ways that ease economic 
sanctions on Cuba. See GAO, Cuban Embargo: Selected Issues Relating to 
Travel, Exports, and Communications, GAO/NSIAD-99-10 (Washington, D.C.: 
Dec. 1998). 

[25] The President has the authority to suspend this provision if its 
suspension is necessary to the national interests of the United States 
and will expedite a transition to democracy in Cuba. Since the law was 
enacted, the provision has been suspended at 6-month intervals. 

[26] These last two titles (III and IV) of Helms-Burton apply only 
where the property seized by the Cuban government is subject to a claim 
by a U.S. person. 

[27] As discussed in this report, agency officials told us that TRSA 
has limited applicability to exports of medical products to Cuba 
because of other statutory restrictions. 

[28] TSRA made Cuban government importers--such as Alimport, a state- 
run enterprise that is the primary importer of food in Cuba--eligible 
to purchase U.S. food and agricultural exports. Prior to TSRA, Cuba's 
socialist economy provided limited opportunities for U.S. exports to 
individuals, nongovernmental organizations, and private business, as 
provided under law, regulation, and policy. 

[29] In contrast, earlier in 2003 (March), OFAC had amended the CACR to 
relax some travel restrictions and increase the amount of cash that 
travelers were permitted to carry from $300 to $3,000. See 68 Federal 
Register 14141. 

[30] The commission is cochaired by the Secretaries of State and 
Commerce and includes the Assistant to the President for National 
Security; the Secretaries of Homeland Security, Housing and Urban 
Development, and Treasury; and the Administrator of the U.S. Agency for 
International Development. The commission initially was chaired by the 
Secretary of State. 

[31] The reports and other information are available at the 
commission's Web site ([hyperlink, http://www.cafc.gov]). 

[32] According to State officials, the Cuban Nickel Targeting Task 
Force has met four times and, at its last meeting in July 27, 2007, 
steel industry representatives agreed to provide input. 

[33] As we have previously reported, within its sphere of 
responsibility, DHS and its components cannot afford to protect 
everything against all possible threats and, as a result, must make 
choices about how to allocate its resources to most effectively manage 
risks. For example, see GAO, Department of Homeland Security: Progress 
Report on Implementation of Mission and Management Functions, GAO-07- 
1240T (Washington, D.C.: Sept. 18, 2007). 

[34] For example, see GAO, Aviation Security: Efforts to Strengthen 
International Passenger Prescreening Are Under Way, but Planning and 
Implementation Issues Remain, GAO-07-346 (Washington, D.C.: May 16, 
2007). 

[35] Office of Homeland Security, National Strategy for Homeland 
Security (Washington, D.C.: 2002). Available at [hyperlink, 
http://www.whitehouse.gov/homeland/book/index.html]. 

[36] DHS's strategic plan states, "We will guide our actions with sound 
risk-management principles that take a global perspective and are 
forward-looking. Risks must be well understood, and risk management 
approaches developed, before solutions can be implementedï¿½. We will 
direct our resources toward those priority threats and vulnerabilities 
based on potential consequences and likelihood of a success" [U.S. 
Department of Homeland Security, Securing Our Homeland: U.S. Department 
of Homeland Security Strategic Plan 2004 (Washington, D.C., 2004): 54]. 
Available at [hyperlink, http://www.dhs.gov/xabout/strategicplan/]. 

[37] See GAO-07-1240T. 

[38] See GAO-06-91. 

[39] The streamlined licensing process is formally known as the License 
Exception Agricultural Commodities process and commonly known as the 
notification process. OFAC regulates U.S. exports of TSRA-eligible 
agricultural commodities, medicines, and medical devices to other 
sanctioned countries, such as Iran and Sudan. 

[40] See 66 Federal Register 36676 and 15 C.F.R. ï¿½ 740.18. 

[41] See 15 C.F.R. ï¿½ï¿½ 740.18 and 772.1. A list of eligible agricultural 
commodities is available for review at the U.S. Department of 
Agriculture Web site ([hyperlink, 
http://www.fas.usda.gov/cmp/cmmdty.pdf]). 

[42] According to agency officials, TSRA did not clearly repeal or 
supersede the relevant Cuban Democracy Act provisions on medical 
products, so the latter's requirements still apply. The act requires a 
specific license for exports of medicines and medical items and 
establishes monitoring requirements and other criteria. As a result, 
medicines and medical devices are eligible for export to Cuba through 
BIS's standard license application process. 

[43] As discussed, the Cuban Democracy Act prohibits any vessel 
unlicensed by Treasury from loading or unloading freight in a U.S. port 
within 180 days after leaving a Cuban port where it engaged in trade of 
goods or services. See Pub. L. 102-484, Div. A, Title XVII, ï¿½ 1706 
(codified at 22 U.S.C. ï¿½ 6005). 

[44] See 66 Federal Register 36683 and 31 C.F.R. ï¿½ 515.533. 

[45] See 70 Federal Register 9225 and 31 C.F.R. ï¿½ 515.533. 

[46] OFAC issued these and other changes to the CACR as interim final 
rules, which took effect without public comment (although OFAC did 
allow for postissuance comment). As stated in OFAC's February 2005 
clarification notice, CACR requirements can be altered without a notice 
of proposed rule making, without the opportunity for public 
participation, and without any delay in the effective date. "Because 
the CACR involves a foreign affairs function, the provisions of the 
Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. ï¿½ 
553) requiring notice of proposed rulemaking, opportunity for public 
participation, and delay in effective date are inapplicable. Because no 
notice of proposed rulemaking is required for this rule, the Regulatory 
Flexibility Act (5 U.S.C. ï¿½ï¿½ 601-612) does not apply." See 70 Federal 
Register 9225. 

[47] Regulations provided for a daily spending (living expenses) limit 
for family travel not to exceed the "maximum per diem rate" for 
government travel to Havana, Cuba, as published by the State Department 
for the period that the family travel took place. At the time of the 
changes, the published per diem rate was $167. See 31 C.F.R. ï¿½ 515.560 
(2003). 

[48] Prior to these changes, family travel was conducted under a 
general license; that is, travelers had to meet CACR criteria for 
family travel but did not have to apply for a Treasury license for 
their first trip within a 12-month period. See 31 C.F.R. ï¿½ 515.561 
(2003). 

[49] Initially, the rule authorizing a second family trip to Cuba 
within a 1-year period required the existence of an "extreme 
humanitarian need." Interpreting this criterion as meaning that a 
relative in Cuba must be very ill, applicants began furnishing OFAC a 
copy of their Cuban relative's medical certificate as proof. Over time, 
U.S. officials became concerned about the legitimacy of some of these 
certificates. OFAC referred the issue to the State Department, which 
modified the rule to eliminate the word "extreme" and allow the travel 
license simply because of a "humanitarian need" stated in the 
application. OFAC subsequently required that applicants include a 
written description of the humanitarian reason that impelled their 
visit with a close relative in Cuba and later changed this requirement 
by deeming that a visit with a close relative per se qualified as a 
humanitarian need. This licensing policy (current until the 2004 rule 
change) required that, to obtain a license, applicants simply identify 
the person whom they would visit in Cuba and the qualifying family 
relationship to that person. 

[50] The rules provide exemptions for those traveling to conduct 
official business of the U.S. government, foreign governments, or 
certain intergovernmental organizations; journalistic and religious 
activities; activities supporting the Cuban people; humanitarian 
projects; or exportation, importation, or transmission of informational 
material. All other travelers seeking to take more than 44 pounds of 
baggage require a Commerce license. Apparel worn by travelers while 
traveling to Cuba, and personal safety and medical commodities for use 
by travelers, such as wheelchairs, crutches, portable medical devices 
(for example, oxygen tanks), and child safety seats and strollers, are 
not included in that 44-pound limit. See 15 C.F.R. ï¿½ 740.14. 

[51] The rule changes did not reduce the value of remittances that 
could be sent to Cuba via OFAC-licensed remittance forwarders, which 
remained at $300 per quarter. However, as discussed, the 2004 rule 
changes narrowed the category of recipients eligible to receive these 
remittances. 

[52] The rule change stated that CAFC had found "that, although gift 
parcels provide a critical humanitarian benefit to the Cuban people, 
they directly benefit the Castro regime in two ways. Such parcels 
decrease the burden on the Cuban regime to provide for the basic needs 
of its people, enabling the regime to dedicate more of its limited 
resources to strengthening its repressive apparatus. Moreover, through 
delivery charges, the regime is able to generate additional sources of 
much needed hard foreign currency." See 69 Federal Register 34565. 

[53] In contrast, U.S agricultural exports to Cuba for 1990-1999 
totaled about $20,000, according to a recent U.S. International Trade 
Commission (ITC) report. See ITC, U.S. Agricultural Sales to Cuba: 
Certain Economic Effects of U.S. Restrictions, Investigation No. 332- 
489, Publication 3932, (Washington, D.C.: July 2007). The report is 
available at the ITC Web site ([hyperlink,http://www.usitc.gov]). 

[54] Regarding the dramatic increase in U.S. agricultural exports to 
Cuba, the ITC's July 2007 report stated that several factors give the 
United States a competitive advantage in exporting agricultural 
products to Cuba. The United States' proximity to Cuba reduces shipping 
costs and allows U.S. exporters to make timely deliveries of small 
quantities of food, eliminating the need for Cuba to store large 
amounts of food. Additionally, U.S. exporters can deliver shipments to 
multiple Cuban ports, facilitating the distribution of food in a 
country with poor transportation infrastructure. Moreover, there is 
evidence that Cuban consumers prefer the high quality of U.S. 
agricultural products. 

[55] The ITC's July 2007 report said that, after OFAC's clarification, 
Alimport refused to pay cash in advance reportedly because by doing so, 
the exported products would become Cuban property while still in the 
U.S. port, and thus would be vulnerable to confiscation by Cuban exiles 
in the United States with legal claims against the Cuban government. 
Treasury said that Alimport's reported concern does not appear to be 
valid because the Terrorism Risk Insurance Act--the only relevant 
statute under which claimants can attach blocked assets--provides a 
specific exception for assets that are licensed pursuant to a statutory 
requirement. Treasury stated that TSRA provides such a statutory 
licensing requirement, and thus the agricultural commodities, even if 
owned by Cuba while in the United States, could not be attached 
pursuant to the Terrorism Risk Insurance Act. 

[56] The ITC's July 2007 report attributed this decline to the 2005 
rule clarification for payments, which increased the transaction costs 
associated with imports from the United States, and other factors, such 
as favorable credit terms offered by other countries and an overall 
decline in Cuban imports in 2006. Additionally, some exporters suggest 
that Cuban officials may have wanted to diversify their import 
suppliers in response to their perception that the United States was a 
potentially unreliable supplier--a perception enhanced by the 2004-2005 
embargo rule changes. The majority of Cuban agricultural imports from 
the United States are consumed by Cuban citizens. 

[57] Smaller exporters or those attempting to sell agricultural 
products to Cuba for the first time have reported that they found the 
travel licensing process to be cumbersome, nontransparent, and time 
consuming. 

[58] The ITC's July 2007 report said that travel to the United States 
by Cuban officials was necessary for U.S. exporters to make sales. 
Particularly important are Cuban officials traveling to inspect U.S. 
processing and facilities, fresh produce, live animals, and other 
products subject to sanitary and phytosanitary standards. 
(Phytosanitary standards refer to plant health, and may include 
requirements about storage pests, plant diseases, chemical treatments, 
and weeds.) For many agricultural products, restricting business travel 
effectively bars U.S. sales to Cuba. State recognized that visits by 
Cuban officials ensuring compliance with sanitary and phytosanitary 
standards may be needed to complete sales. State also said that the 
department had issued visas to groups of Cuban officials engaged in 
such activities on several occasions since Cuban purchases began in 
December 2001, and that it is prepared to consider similar visits in 
the future, so long as they are properly coordinated through the U.S. 
Department of Agriculture. State asserted that the duration of the 
visas the department grants to Cubans for such visits adheres to the 
itineraries approved by Agriculture. In contrast, State said it does 
not believe that marketing visits by Cuban officials are necessary for 
such sales and so does not grant visas for that purpose. 

[59] Licensed humanitarian exports to Cuba (which are reported under 
nonagricultural products in U.S. Census Bureau data) include some 
medical and pharmaceutical products. 

[60] Cuban government propaganda cites continuing U.S. restrictions on 
medical exports as a cause of medical shortages in Cuba. 

[61] Full-time journalists, professional researchers, and U.S. federal 
(but not state) and foreign government officials, among others, are 
authorized to travel to Cuba under a general license. In addition, 
educational, religious, and some other licenses often authorize 
multiple travelers to visit Cuba on multiple trips. 

[62] Authorized U.S. travelers may enter Cuba legally through third 
countries, although banking restrictions make purchasing airline 
tickets from a third country to Cuba difficult inside the United 
States. Estimates of the number of unauthorized travelers to Cuba 
transiting third countries to enter Cuba exceed 120,000 annually. 

[63] The International Trade Center is the joint technical cooperation 
agency of the United Nations (UN) Conference on Trade and Development 
and the UN World Tourism Organization. 

[64] One study estimated that about 90 percent of the nonresident 
visitor arrivals to Cuba reported as "other Caribbean arrivals" by the 
UN World Tourism Organization probably are visits to Cuba of Cuban born 
Cuban Americans traveling to Cuba via other countries, according to the 
ITC's July 2007 report. 

[65] The Cuban government reported that about 2.26 million 
international travelers arrived in Cuba in 2005. 

[66] For example, remittance forwarders must maintain copies of the 
affidavits individuals sending remittances must sign attesting that 
that they are aware of, and in compliance with, OFAC regulations 
governing remittances sent to Cuba. See 31 C.F.R. 515 and TDF 90-22.52. 

[67] OFAC officials told us that the data are collected annually and 
used for licensing and enforcement purposes. The data are self-reported 
by service providers and may double count some remittances. 

[68] Studies in 2002 and 2004 concluded that as a result of Cuban and 
U.S. efforts to control and influence remittances, and relatively high 
transaction costs (fees), Cuban remitters in the United States tend to 
rely more on informal remittance mechanisms. According to a 2001 Inter- 
American Development Bank survey of Cuban remitters, 46 percent rely on 
mulas (mules) or viajeros (travelers). Recognizing the significant flow 
of remittances through informal means, the 2004 CAFC report recommended 
that the President direct U.S. law enforcement authorities to conduct 
"sting" operations against "mule" networks and others who illegally 
carry money to Cuba. 

[69] Remittances of $930 million would comprise about 3.2 percent of 
Cuba's estimated nominal GDP for 2001 of $29.4 billion. 

[70] Remittances of $400 million, $800 million, or $1 billion would 
comprise about 1.1 percent, 2.3 percent, or 2.8 percent, respectively, 
of Cuba's estimated nominal GDP for 2003 of $35.4 billion. 

[71] Remittances of $460 million would comprise about 1.1 percent of 
Cuba's estimated nominal GDP for 2004 of $40.2 billion. 

[72] Individuals may send gift parcels from the United States to Cuba 
without a license, but gift parcel consolidators must posses a Commerce 
license. Consolidators may send parcels worth up to the total dollar 
value listed on their licenses, which may be greater than the value of 
gift parcels actually sent. See 15 C.F.R. 746.2. GAO previously 
reported that BIS had not comprehensively analyzed available data on 
actual shipments of items subject to its export controls. See GAO, 
Analysis of Data for Exports Regulated by the Department of Commerce, 
GAO-07-197R, (Washington, D.C.: Nov. 2006). 

[73] The number of applications processed includes both standard and 
streamlined license applications. As previously discussed, the 
streamlined licensing process is formally known as the License 
Exception Agricultural Commodities process and commonly known as the 
notification process. 

[74] The drop in license applications from fiscal years 2005 to 2006 
shown in fig. 3 may reflect U.S. exporters' perceptions that the 2004- 
2005 rule changes reduced U.S. export opportunities (by causing Cuban 
officials to reduce their reliance on imports from the United States). 
In addition, the ITC's July 2007 report on U.S. agricultural exports to 
Cuba suggested that the 2005 payment rule change may have forced some 
smaller exporters out of the market. Moreover, as previously discussed, 
Cuban agricultural imports declined in 2005-2006 (see fig. 1). 

[75] Exporters are not required to use the streamlined process; 
however, most do because the processing and approval of standard 
applications for export licenses can take more than three times longer. 

[76] BIS has a total of about 55 licensing officers in its Office of 
Nonproliferation and Treaty Compliance and its Office of National 
Security and Technology Transfer Controls. 

[77] State officials cited the following two license applications as 
illustrative of those presenting unusual issues: (1) an application to 
allow U.S. persons to participate in cancer vaccine trials underway in 
Cuba; and (2) an application to allow U.S. persons to participate in 
potentially beneficial experimental medical treatments in Cuba that are 
unavailable in the United States. In considering such applications, 
officials said they try to balance U.S. humanitarian goals (e.g., 
allowing sick U.S. children access to cancer vaccines) with U.S. 
foreign policy goals (e.g., denying resources to the Cuban government). 

[78] In April 2007, the Deputy Assistant Secretary of State for 
Economic, Energy, and Business Affairs told the House Committee on 
Foreign Affairs that State provides foreign policy guidance on 
approximately 30 to 50 Commerce and Treasury license applications for 
Cuba each month. 

[79] OFAC data show that the number of licenses issued for additional 
family visits to Cuba in cases of humanitarian need grew substantially 
before this period, from 9,979 in 2000 to 19,252 in 2001. 

[80] In addition, one additional staff in OFAC's Miami field office 
devotes about half his time to enforcing the Cuba embargo and the other 
half to duties not related to the Cuba embargo. 

[81] In 2003--before the rule changes--OFAC estimated that about 21 
staff equivalents (or about 15 percent of its total authorized staff 
resources) were devoted to implementing and enforcing the Cuba embargo. 

[82] Commenting on a draft of this report, Treasury said that most of 
OFAC's Cuba-related work is centered in the agency's licensing division 
and involves responding to requests for guidance from the public and 
applications for licenses to engage in Cuba-related transactions. 
Treasury cited the example of licensing travel-related and other 
transactions incident to the marketing, sales negotiation, and 
accompanied delivery or servicing of agricultural products exported to 
Cuba, as provided by TSRA. 

[83] Currently, there are 29 carrier service providers, 16 of which 
also have travel service provider licenses to arrange travel on their 
own flights. In addition, there are 158 travel service providers, of 
which 95 also are licensed as remittance forwarders and 2 are licensed 
solely as remittance forwarders. Most of these service providers are 
located in the Miami area, but a few are located in other states, such 
as New Jersey and California. 

[84] OFAC officials told us that the Miami field office also has 
reduced its public outreach, despite an increase in inquiries regarding 
the rule embargo changes. As previously discussed, OFAC's Miami field 
office was established at the direction of Congress to strengthen 
enforcement of the Cuba embargo. 

[85] Seven of the eight suspensions cited violations for providing 
travel services to unauthorized travelers, systemic failure to ensure 
travelers were authorized, and working with agencies not authorized to 
provide Cuba travel services. One service provider was cited for 
failure to maintain records systematically. 

[86] Based on the authority in Presidential Proclamation 6867, as 
amended by Presidential Proclamation 7757, the Coast Guard enacted new 
regulations for entry into Cuban territorial waters in July 2004. See 
33 C.F.R. ï¿½ 107.200 et seq. The regulations require any U.S. vessel or 
vessel subject to U.S. jurisdiction less than 100 meters (328 feet) in 
length to have a Coast Guard permit to travel to Cuba. 

[87] A Treasury license is required because sailing a vessel to Cuba 
likely will require the crew or passengers to engage in some financial 
transactions in Cuba, such as paying port or other fees, which are 
prohibited under by the CACR unless licensed. An export license is 
required because, under U.S. law and regulation, sailing a U.S.-owned 
vessel from the United States to a foreign country constitutes an 
export of that vessel. 

[88] Currently, Miami International Airport is the only U.S. airport 
with regular, direct flights to Cuba. Two other airports--John F. 
Kennedy International Airport, New York, and Los Angeles International 
Airport, California--also are authorized to host direct flights to Cuba 
and have hosted such flights in the past. According to OFAC and CBP, 
John F. Kennedy International Airport has hosted about two to three 
charter flights per month since December 2006. 

[89] Three U.S. ports handle the majority of exports to Cuba: Port 
Everglades (Ft. Lauderdale), Florida, which handles all container 
shipments, and New Orleans and Gramercy, Louisiana, which handle bulk 
agricultural shipments to the island. 

[90] All shipments to Cuba appear on the port's "open shipment list" 
when the shipper's export declaration is filed in the Automated Export 
System, which is a paperless (electronic) system that allows exporters 
to file the shipper's export declarations and ocean manifest 
information directly to CBP Officers at the port confirm export license 
information using the Treasury Enforcement Communication System. 

[91] As of May 2007, five flights were scheduled to arrive from Cuba in 
the 10 minutes between 11:30 a.m. and 11:40 a.m., one at 4:00 p.m., one 
at 4:30 p.m., and one 5:45 p.m. 

[92] For example, see GAO-08-219. This report shows that staffing 
shortages can affect the quality of traveler inspections and make it 
difficult for ports of entry to fully carry out antiterrorism and other 
traveler inspection programs and minimize traveler wait times. Because 
ports of entry rely on officers working overtime to accomplish their 
inspection responsibilities, staffing shortages contribute to morale 
problems, fatigue, and safety issues for CBP officers contribute to 
observed high rates of attrition, which robs CBP of experienced 
officers, and interferes with officer training. The report also 
observed that since the terrorist attacks of September 11, 2001, CBP's 
role has involved increased emphasis on countering threats posed by 
terrorists and others attempting to enter the country with fraudulent 
or altered travel documents. In addition, the report noted that 
intelligence officials believe that the United States will face a 
persistent and evolving terrorist threat, that the terrorist group al 
Qaeda will intensify its efforts to put operatives here, and that 
terrorists with no criminal record may use legitimate travel documents 
when they attempt to enter the country through ports of entry. Although 
CBP's goal is to interdict all violators, CBP estimated that several 
thousand inadmissible aliens and other violators entered the country 
though ports of entry in fiscal year and that the agency may need up to 
several thousand more officers and agricultural specialists to operate 
its ports of entry. 

[93] Subject to available resources, OFAC opens investigation 
(enforcement) cases based on an investigatory lead that creates a 
reasonable suspicion that a sanctions violation has occurred. If the 
resulting investigation establishes that there is sufficient evidence 
of a violation to support opening a civil penalty case, the case is 
referred to OFAC's civil penalty unit. Otherwise the case is closed. 

[94] OFAC stated that the agency's enforcement staff do not specialize 
by sanctions program and work simultaneously on numerous cases within 
multiple programs, and the agency's case tracking system does not 
provide a basis for estimating staff time by sanctions program. 

[95] Dual-use items subject to BIS regulations have primary commercial 
use, but also have military and proliferation applications, or may be 
used in terrorist activities. 

[96] OFAC said that civil penalty cases are opened based upon a 
determination of a probable violation and referral by investigators 
and, since these cases have been vetted by investigators, they most 
likely will result in some penalty action. 

[97] However, in August 2007, OFAC imposed an $186,000 fine on one of 
the largest Internet travel agencies for arranging trips to Cuba 
without proper licenses. 

[98] OFAC reported that although it prevailed in a number of 
administrative law judge proceedings involving Cuba travel-related 
violations, the recommended penalties were less than provided by the 
current civil penalty guidelines, motivating both the agency and the 
violators to resolve disputes through informal settlements at amounts 
less than may have been assessed through a formal penalty process. In 
addition, OFAC reported that it had made an aggressive effort to close 
cases where the statute of limitations had run out or the penalty was 
otherwise unenforceable. 

[99] OFAC stated that none of its civil penalty staff are dedicated to 
any one sanctions program and that its staff must work on all of the 
active sanctions programs administered by OFAC as well as on violations 
under terminated programs that are still viable under the applicable 
statute of limitations. Most civil penalty staff work on cases 
involving several different sanctions programs each day. Further, OFAC 
noted that many cases involve violations of multiple sanctions 
programs. 

[100] In November 2005, BIS imposed a $37,500 civil penalty on Medical 
Equipment Specialists, Inc., for five violations involving (1) 
attempting to export and conspiring to export X ray film processors to 
Cuba via Canada without the required license and with knowledge that a 
violation would occur and (2) making false representation regarding the 
ultimate destination on the shippers export declaration. In May 2006, 
BIS imposed a $12,000 civil penalty on Dresser Instruments S.A. de C.V. 
for four violations involving aiding and abetting unlicensed re-exports 
of pressure gauges and other items to Cuba. 

[101] Justice officials reported a current prosecution of a Cuba 
embargo-related case by the U.S. Attorney for the Southern District of 
Florida, headquartered in Miami, and prior prosecutions of Cuba embargo-
related cases by U.S. Attorneys in Houston, Texas, and Philadelphia, 
Pennsylvania. However, Justice officials told us that, due to 
limitations in the department's database for prosecutions and 
convictions, the department cannot readily provide an accurate 
accounting of all embargo-related cases. 

[102] The U.S. Attorney for the Southern District of Florida has a 
staff of approximately 233 Assistant United States Attorneys and 227 
support personnel. Besides the main office in Miami, there are three 
staffed branch offices in Ft. Lauderdale, West Palm Beach, and Fort 
Pierce and one unstaffed branch office in Key West. There is also a 
high-intensity drug trafficking area office in West Miami-Dade and a 
health care fraud facility in Miramar. 

[103] The 2006 CAFC report recommended that U.S. agencies establish an 
interagency law enforcement task force for better enforcement of U.S. 
economic sanctions on the Castro regime. The Cuban Sanctions 
Enforcement Task Force, established and headed by the U.S. Attorney in 
Miami, includes BIS/OEE, CBP, ICE, OFAC, and the U.S. Coast Guard. The 
Federal Bureau of Investigation supports this effort by advising and 
assisting the task force about counterintelligence issues. 

[104] The indictment alleged that several individuals in Florida had 
obtained and sold fraudulent religious travel licenses for more than $1 
million. The 2006 CAFC report recommended directing law enforcement 
agencies to pursue criminal investigations, including prosecution, 
where possible and appropriate, of CACR and other violations, 
especially for those found to have been involved in organizing or 
facilitating unlicensed travel transactions with Cuba. 

[105] These concerns relate to the application of U.S. laws and 
regulations concerning the Cuba embargo to persons resident in or 
incorporated in other countries. 

[106] In 1997, for example, the European Union initiated a case against 
the United States in the World Trade Organization regarding provisions 
of the Helms-Burton Act and certain aspects of the Cuba embargo. See 
WT/DSB/M/46 (Aug. 6, 1998). 

[107] For example, U.S. officials approached some European banks to 
convince them to close Cuban accounts and cease handling Cuban 
government payments for U.S. exports. The European Union warned these 
banks that such measures would violate European Union 
antidiscrimination laws. 

[108] For example, in 2007, 184 UN member states--including all major 
U.S. allies--supported a resolution calling for an end to the U.S. 
embargo, 4 member states opposed the resolution (the United States, 
Israel, the Marshall Islands, and Palau), and 1 member state abstained 
from the vote (Micronesia). Only in 1992 did a majority of UN member 
states not vote against the U.S. embargo. In that year, 59 member 
states voted for ending the embargo, 3 member states were opposed, and 
71 member states abstained. 

[109] The 2007 and prior reports are available at the BIS Web site 
([hyperlink, http://www.bis.doc.gov]). 

[110] Canadian and European banks that reportedly have recently ceased 
doing business in Cuba include Bank of Nova Scotia, Barclays, BAWAG 
PSK, Credit Suisse, Deutsche Bank, HSBC (including subsidiaries 
Banitsmo (Panama) and Bank Canada), ING Groep NV, Royal Bank of Canada, 
and Swiss Bank UBS. 

[111] In the case of Canada and members of European Union, for 
instance, opposition to the U.S. embargo reflects their laws. For 
example, the Canadian Foreign Extraterritorial Measures (United States) 
Order explicitly prohibits compliance in Canada with the U.S. embargo 
on Cuba (see [hyperlink, 
http://www.canadiannetworkoncuba.ca/Documents/FEMA-96.shtml]). 

[112] Cuban tourist cards can be purchased at third-country airports 
and foreign customs officials usually stamp only these loose-leaf 
visas, not the permanent pages of U.S. passports. 

[113] For example, the Canadian Supreme Court recently refused to honor 
a letter of request from a U.S. court seeking the production of 
documents and oral evidence from a Canadian citizen and resident for 
use in a court action related to a U.S. prosecution for violation of 
the Cuba embargo. See Morgan, Lewis & Bockius LLP v Gauthier ((2006) 82 
OR (3d) 189 (SCJ)). 

[114] The 2004 CACF report stated that along with remittances, mostly 
from the United States, trade, tourism, and access to subsidized 
Venezuelan oil were the Castro regime's "economic lifelines." State 
said that, although there were no reliable estimates of the value of 
Venezuelan oil subsidies, the Cuban goverment reported that trade with 
Venezuela totaled more than $2.5 billion in 2006. 

[115] Leading Cuban exports include sugar, nickel, tobacco, fish, 
medical products, citrus, and coffee. Cuba's leading buyers were Canada 
(19 percent), Netherlands (19 percent), China (16 percent), Bermuda (14 
percent), and Spain (5 percent). In 2006, high metals prices continued 
to boost Cuban earnings from nickel and cobalt production. 
Additionally, Cuba has been paying for Venezuelan oil, partly by 
exporting the services of Cuban personnel, including some 20,000 
medical professionals. See Central Intelligence Agency, The World 
Factbook 2007 (Washington, D.C., 2007). 

[116] Leading Cuban imports include petroleum, foodstuffs, machinery 
and equipment, and chemicals. Cuba's leading suppliers were Venezuela 
(27 percent), China (16 percent), Spain (10 percent), Germany (7 
percent), Canada (6 percent), Italy (4 percent), and the United States 
(4 percent). Since late 2000, Venezuela has been providing Cuba oil on 
preferential terms, and it currently supplies an estimated 98,000 
barrels per day of petroleum products. See Central Intelligence Agency, 
The World Factbook 2007 (Washington, D.C., 2007). State said that, 
although there were no reliable estimates of the value of Venezuelan 
oil subsidies, the Cuban government reported that trade with Venezuela 
totaled more than $2.5 billion in 2006. 

[117] See United Nations World Tourism Organization, World Tourism 
Highlights, 2006 Edition. Available at [hyperlink, www.world-
tourism.org]. 

[118] Although highly critical of the Cuban government's political 
repression and human rights violations, Human Rights Watch, for 
instance, has criticized the restrictions on travel by U.S. citizens 
and argued that the restrictions violate article 19 of the 
International Covenant on Civil and Political Rights and the 1975 
Helsinki Final Act and successive accords. 

[119] For example, more than 20 governors of U.S. states have visited 
Cuba over the past several years as part of state-sponsored trade 
delegations. 

[120] One group, Pastors for Peace, for example, reports having 
organized and conducted 18 unauthorized "friendship caravans" to Cuba 
since 1992 (see [hyperlink, http://www.pastorsforpeace.org]). Another 
group, the Venceremos ("we shall overcome") Brigade, reports that over 
the past 35 years it has organized unauthorized travel to Cuba for more 
than 8,000 people from the United States (see [hyperlink, 
http://www.venceremosbrigade.org]). 

[121] As we observed at OFAC's Miami field office and at several travel 
service providers in Miami, to facilitate the quick processing of 
family travel licenses, OFAC e-mails most travel licenses to providers 
or individuals in the form of an Adobe Acrobat file (commonly known as 
a "PDF file"). Agency officials are aware that these computer files can 
be manipulated to produce fraudulent licenses. OFAC officials said they 
had worked with a contractor to put in place reasonable measures to 
prevent duplicating licenses. 

[122] CBP occasionally inspects passengers and baggage departing for 
Cuba and other international destinations based on intelligence, 
referrals from Transportation Security Administration officers, public 
tips, or risk factors. 

[123] According to the 2007 National Money Laundering Strategy--issued 
by the Departments of Justice, Homeland Security, and Treasury--stored- 
value cards (sometimes referred to as prepaid cards) are an emerging 
cash alternative for both legitimate consumers and money launderers 
alike. Stored-value cards provide a compact, easily transportable, and 
potentially anonymous way to store and access cash value. Open system 
cards lower the barrier to the U.S. payment system, allowing 
individuals without a bank account to access illicit cash via automated 
teller machines globally. The 2007 strategy states that the U.S. Drug 
Enforcement Administration, ICE, and the Internal Revenue Service have 
all found prepaid cards used in conjunction with bulk cash smuggling. 
Drug dealers load cash onto prepaid cards and send the cards to their 
drug suppliers outside the country. The suppliers then use the cards to 
withdraw money from a local automated teller machine. 

[124] For instance, Caribbean Transfers ([hyperlink, 
http://www.caribbeantransfers.com]), based in Cuba, and Family 
Remittances ([hyperlink, http://www.familyremittances.com]), based in 
Canada, are online services that allow customers to send funds to Cuba 
through debit and transfer cards. Duales (http://www.duales.com) and 
Transcard ([hyperlink, http:// www.transcard.com]) are Canadian online 
services that allow customers to send funds to a variety of countries, 
including Cuba, via debit and transfer cards. 

[125] According to the 2007 National Money Laundering Strategy, the 
most complex money laundering methods are often those that use trade to 
transfer value into or out of the United States. Trade-based money 
laundering encompasses a variety of schemes. The most common in the 
Western Hemisphere is the Black Market Peso Exchange in which Colombian 
drug traffickers swap illicit dollars in the United States for clean 
pesos in Colombia. Other methods include manipulating trade documents, 
and using criminal proceeds to buy gems or precious metals. Trade-based 
schemes are also used by informal value transfer systems to settle 
accounts. 

[126] As previously discussed, according to agency officials, because 
TSRA did not clearly repeal or supersede the relevant Cuban Democracy 
Act provisions on medical products, the act's requirements still apply. 

[127] 50 U.S.C. app. ï¿½ 5(b). 

[128] National Defense Authorization Act for Fiscal Year 1993, Pub. L. 
No. 102-484, Div. A, Title XVII, 106 Stat. 2572-81 (1992). 

[129] Pub. L. No. 104-114, 110 Stat. 785. 

[130] Agriculture, Rural Development, Food and Drug Administration, and 
Related Appropriations Act, Pub. L. 106-387, Title IX, 114 Stat. 1549A- 
67-1549A-72 (2000) (codified at 22 U.S.C. ï¿½ï¿½ 7201-7209). The law also 
permitted export of such items to some other countries subject to U.S. 
sanctions. 

[131] 31 C.F.R. pt. 515. 

[132] These reports and related materials are available at the 
commission's Web site ([hyperlink, http://www.cafc.gov]). 

[133] See, for example, Congressional Research Service, Cuba: U.S. 
Restrictions on Travel and Remittances, (Publication RL31139, 
Washington, D.C., updated Aug. 21, 2007). 

[134] See ITC, U.S. Agricultural Sales to Cuba: Certain Economic 
Effects of U.S. Restrictions, (Investigation No. 332-489, Publication 
3932, Washington, D.C., July 2007). This and other ITC publications on 
Cuba are available at the ITC's Web site ([hyperlink, 
http://www.usitc.gov]). 

[135] See, for example, GAO/NSIAD-99-10. 

[136] Information about the Automated Targeting System, an intranet- 
based enforcement and decision support tool for all CBP targeting 
efforts, and the Automated Export System, which provides for the 
electronic filing of the shipper's export declarations and 
transportation (manifest) information to CBP, is available at DHS and 
CBP Web sites ([hyperlink, http://www.dhs.gov] and [hyperlink, 
http://www.cbp.gov]). 

[137] A description of the Exodus Command Center is available on the 
CBP Web site ([hyperlink,http://www.cbp.gov]). 

[138] Information for OFAC penalties was available for 2003-2007. See 
OFAC's Web site ([hyperlink, 
http://www.treas.gov/offices/enforcement/ofac/]). 

[139] The U.S. Attorney for the Southern District of Florida has its 
main office in Miami. Additional information about the office is 
available at its Web site ([hyperlink, 
http://www.justice.gov/usao/fls/]). 

[140] Justice's Legal Information Office Network System database 
comprises caseload data entered by each of the 94 U.S. Attorneys 
Offices relating to the lead and other charges. According to Justice, 
because of the high evidentiary standards for prosecutions under the 
Trading with the Enemy Act, many prosecutions involving embargo 
violations involve charges under more general criminal statues, such as 
those related to giving false information to a federal officer or 
failing to report (illicit) income. However, information in the Legal 
Information Office Network System database is insufficiently detailed 
to allow Justice to identify prosecutions for embargo violations under 
these more general statues. 

[141] These reports are available at the BIS Web site ([hyperlink, 
http://www.bis.doc.gov]). 

[142] See, for example, GAO, Export Controls: Challenges Exist in the 
Enforcement of an Inherently Complex System, GAO-07-265 (Washington, 
D.C.: Dec. 20, 2006) and Economic Sanctions: Effectiveness as Tools of 
Foreign Policy, GAO/NSIAD-92-106 (Washington, D.C.: Feb. 19, 1992). 

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