On May 28, 2024, the Biden administration announced new measures easing restrictions on
independent small businesses in Cuba. The announcement follows a
recent decision by the State Department to remove Cuba from the
list of countries deemed uncooperative on counterterrorism.
The Administration criticized the Cuban government in the announcement, saying: "We know the Cuban economy is in dire straits amid recurring shortages of fuel, electricity, increasingly even food. It's clear the communist experiment of Cuba has failed, the government is no longer able to provide for its citizens' most basic needs."
The new measures implemented by the Department of Treasury's Office of Foreign Assets Control (OFAC) include four main parts:
1. Authorized Internet-Based Services and Software.
Cuban small businesses will now be able to access additional internet-based services such as video conferencing, social media, maps, e-learning, automated translation, and other online services.
U.S.-based entities will be allowed to provide cloud-based services to these small businesses. OFAC is also authorizing the export or reexport of Cuban-origin software and mobile applications from the United States to third countries.
2. Re-defining "Self-Employment."
OFAC is scrapping the term "self-employed individual" and replacing it with a new term: "independent private sector entrepreneur." The new term will still cover traditional self-employed individuals such as business owners, but it will also cover private cooperatives or small businesses that are wholly owned by such individuals.
The new term also excludes prohibited Cuban officials and prohibited Cuban Communist Party members to ensure they do not take advantage of this change intended to benefit the private sector.
3. Access to U.S. Bank Accounts.
OFAC is authorizing Cuban entrepreneurs to open and remotely use U.S. bank accounts. Cuban entrepreneurs can use these accounts whether they are physically located in the United States, Cuba, or another country.
4. U-Turn Transactions.
OFAC is reinstating its authorization of "U-turn" transactions. "U-turn" transactions are funds transfers that originate and terminate outside the U.S. where neither the sender or recipient is subject to U.S. jurisdiction.
OFAC disallowed "U-turn" transactions in 2019. U.S. banks may now process these funds transfers when Cuba or a Cuban national has an interest, provided that neither party is subject to U.S. jurisdiction.
OFAC has issued a FAQ document to help guide stakeholders navigate these changes. Available here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.