1176. What level of due diligence are internet-based service providers expected to conduct to determine whether the intended recipients of an export or reexport are prohibited officials of the Government of Cuba, prohibited members of the Cuban Communist Party, or organizations administered or controlled by the Government of Cuba or the Cuban Communist Party pursuant to 31 CFR § 515.578(b)(1)?
Section 515.578(b)(1) of the CACR excludes from authorization under 31 CFR 515.578(a)(1)-(3) the direct or indirect exportation or reexportation of services with knowledge or reason to know that such services are intended for a prohibited official of the Government of Cuba, as defined in 31 CFR § 515.337, a prohibited member of the Cuban Communist Party, as defined in 31 CFR § 515.338, or to organizations administered or controlled by the Government of Cuba or the Cuban Communist Party, except as specified in 31 CFR § 515.578(a)(4)....
1) This FAQ, which could be regarded as a sort of soft safe harbor for diligence purposes, follows the “may reasonably rely…unless…know or have reason to know” formulation found in other OFAC FAQs such as FAQ # 1106 and FAQ # 1044. This appears to be OFAC’s way of saying that due diligence expectations in this particular context would not entail seeking the corroboration of “information provided to [U.S. persons] by their customers in the ordinary course of business,” but if there is something in such information presenting a clear enough red flag to cast doubt on its legitimacy, there would be no space for “reasonable reliance”. See 515.578 and comments thereto for more on the GL referred to here. Compare FAQ # 1174 (issued on the same day).
* For comments on the scope of “communications”-related GLs in general, see section...