New measures from the US Department of the Treasury to support Cuban entrepreneurs

The United States Department of the Treasury, through the Office of Foreign Assets Control (OFAC), has announced new amendments to the Cuban Assets Control Regulations, with the aim of increasing support for Cuban private sector entrepreneurs and promoting internet freedom on the island. These modifications are part of the policy announced by the Administration on May 16, 2022, to strengthen support for the Cuban people.

The new amendments, which will come into effect after their publication in the Federal Register on May 29, 2024, include key measures such as authorizing cloud-based services to facilitate internet communication and expanding services for the installation and repair of telecommunications equipment. In addition, the export and reexport of Cuban-origin software and mobile applications from the United States to third countries will be allowed.

Another significant modification is the redefinition of the term "independent entrepreneurs in the private sector," which now excludes prohibited officials from the Cuban Government and members of the Cuban Communist Party. This new definition encompasses not only self-employed workers but also cooperatives and other private companies with up to 100 employees.

In addition, authorization for "U-turn" transactions has been reinstated, allowing banking institutions to process fund transfers involving Cuba, as long as these transactions originate and terminate outside the U.S. and do not involve individuals subject to U.S. jurisdiction. The reporting process for transactions related to telecommunications has also been updated, eliminating the need to send faxes and allowing reports to be sent via email.

Measures Implemented by the U.S. Department of the Treasury to Support Cuban Entrepreneurs

Internet-based Services:

Measure: Export of cloud-based services to support internet communication in Cuba is authorized.

Meaning: This will allow Cubans to access and use services such as instant messaging, social networks, web hosting, video conferencing, collaboration platforms, and more, improving connectivity and communication.

Expansion of Installation and Repair Services:

Measure: The authorization for installation, repair, or replacement services of equipment related to communications is extended, without specific restrictions on export control classification.

Meaning: It will facilitate the modernization and maintenance of technological infrastructures in Cuba, enabling improvements in the quality and reliability of communication services.

Export of Software and Mobile Applications:

Measure: The export and reexport of Cuban-origin software and mobile applications from the United States to third countries is authorized.

Meaning: This will allow Cuban developers to commercialize their products in international markets, promoting the growth of the Cuban technological sector.

Redefinition of "Independent Entrepreneurs in the Private Sector":

Measure: The term now excludes officials from the Cuban Government and members of the Cuban Communist Party, and includes self-employed workers, cooperatives, and private businesses with up to 100 employees.

Meaning: Increases the recognition and support for a greater number of Cuban entrepreneurs, promoting a more robust and diversified private sector.

Bank Accounts in the U.S. for Cuban Entrepreneurs:

Measure: Independent entrepreneurs in the Cuban private sector are authorized to maintain and use bank accounts in the USA.

Meaning: It facilitates international financial transactions, allowing these entrepreneurs to access banking services and conduct business more easily.

Authorization of "U-turn" transactions:

Measure: The authorization for "U-turn" transactions is reinstated, allowing banking institutions to process fund transfers involving Cuba, as long as they originate and end outside of the US and do not involve persons subject to US jurisdiction.

Meaning: It improves the flow of remittances and payments for authorized transactions in the Cuban private sector, financially supporting entrepreneurs and their businesses.

Update of Reporting Requirements for Telecommunications Transactions:

Change: The requirement to send reports by fax or postal mail is replaced by the option of sending them by email.

Meaning: Simplifies and streamlines the reporting process for entities that provide telecommunications services, increasing administrative efficiency.

Correction of Licenses for Educational Activities:

Measure: A typographical error in the general licenses for educational activities is corrected, restoring authorization for transactions beyond those related to travel.

Meaning: Clarifies and expands the possibilities for educational institutions in the United States in their interactions and collaborations with Cuba, enhancing academic and cultural exchange.

Frequently Asked Questions about the New Measures from the U.S. Department of the Treasury to Support Cuban Entrepreneurs

1. Who will be able to open bank accounts in the United States?

Answer: Independent entrepreneurs in the Cuban private sector are defined as those who are not prohibited officials of the Cuban Government or members of the Cuban Communist Party. This definition includes self-employed workers, cooperatives, and other private companies with up to 100 employees. These entrepreneurs will be able to open and use bank accounts in the United States to carry out authorized or exempt transactions under the regulations.

2. What types of internet-based services will be authorized for export to Cuba?

Response: Incidental services to internet communication will be authorized, such as instant messaging, social networks, web hosting, video conferencing, collaboration platforms, electronic games, and online learning platforms, among others. Support services will also be authorized, such as software design, business consulting, and information technology management services, including cloud-based services.

3. What changes have been made to the definition of "independent entrepreneurs in the private sector"?

Response: The definition of "independent entrepreneurs from the private sector" now excludes prohibited officials from the Cuban Government and members of the Cuban Communist Party. The new definition encompasses not only self-employed workers (cuentapropistas) but also cooperatives and other private companies with up to 100 employees, providing a more inclusive framework to support a greater variety of entrepreneurs in Cuba.

4. What are "U-turn" transactions and how will they benefit Cubans?

Response: "U-turn" transactions allow banking institutions to process fund transfers involving Cuba, as long as they originate and terminate outside the United States and do not involve individuals subject to U.S. jurisdiction. This measure will facilitate the flow of remittances and payments for authorized transactions in the Cuban private sector, providing significant economic support to entrepreneurs and their businesses on the island.

These measures represent an important step towards promoting the economic independence and connectivity of the private sector in Cuba, facilitating a more favorable environment for business and communication on the island.

The Cuban regime has continuously requested the easing of the embargo, and now that they have these concessions, the question arises: When will they take steps to fully liberalize the domestic market, as well as to guarantee freedom of expression and politics within the island?