"The U.S. does not support actions that would institutionalize a system by which a Cuban government entity garnishes the wages of hard-working athletes who simply seek to live and compete in a free society," National Security Council spokesman Garrett Marquis said. "The administration looks forward to working with MLB to identify ways for Cuban players to have the individual freedom to benefit from their talents, and not as property of the Cuban state."
U.S. law prohibits virtually all payments to the Cuban government under the 60-year embargo on the island but MLB argued the Cuban Baseball Federation, which oversees all aspects of the sport on the island, was not formally a part of the Cuban state.
Opponents called that argument ridiculous given the tight control the highly regimented government maintains over virtually every aspect of life in Cuba.
The letter from the Office of Foreign Assets Control obtained by The Associated Press agrees, saying that "in light of facts recently brought to our attention, and after consultation with the U.S. Department of State, OFAC has determined that MLB's payments to the Cuban Baseball Federation are not authorized."
"We stand by the goal of the agreement, which is to end the human trafficking of baseball players from Cuba," an MLB statement said.
Without a formal path from Cuba to the major leagues, hundreds of top players have left the island for good, many making harrowing crossings on rafts and rickety boats in the years before Cuba abandoned a hated exit permit requirement for most of its citizens.
While such dangerous escapes were mostly eliminated with greater travel freedoms, players still needed to cut ties with Cuban baseball and often their families and hometowns, going years without returning after signing with the major leagues.
"The deal with Major League Baseball is an attempt to stop human trafficking, encourage cooperation and elevate the level of baseball," the Cuban Baseball Federation said on Twitter. "The politically motivated attacks on the deal hurt players, their families, and fans."
Last week the Cuban federation released its first group of players able to sign contracts directly with Major League Baseball organizations, and some expected to be playing in the United States this year.
The 34 players were 17 to 25, classified as international amateurs under MLB rules and eligible to sign minor league contracts. No likely stars were apparent on the list, but more notable players included 22-year-old Raidel Martinez Perez and 23-year-old Liván Moinelo Pita, who have played professionally in Japan; 17-year-old infielder Loidel Chapellí Zulueta; and 18-year-old pitcher Norge Carlos Vera Aldana.
The Cuban federation also agreed to release all players 25 and older with at least six years of professional experience to be classified as international professionals under MLB's labor contract with the players' association and not subject to international amateur signing bonus pools.
Associated Press Baseball Writer Ronald Blum in New York contributed to this report.