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 aimed at increasing support for private sector entrepreneurs in Cuba and promoting internet freedom on the island. These modifications are part of the policy announced by the Biden Administration on May 16, 2022, to strengthen support for the Cuban people.
The new amendments, which will take effect upon 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. Additionally, the export and re-export of Cuban-origin software and mobile applications from the United States to third countries will be permitted.
Another significant change is the redefinition of the term "independent private sector entrepreneurs," 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 businesses with up to 100 employees.
Furthermore, the authorization for "U-turn" transactions has been reinstated, allowing banking institutions to process fund transfers involving Cuba, as long as these originate and terminate outside the United States and do not involve persons subject to U.S. jurisdiction. The reporting process for telecommunications-related transactions has also been updated, eliminating the need to send faxes and enabling the submission of reports via email.
Measures Implemented by the Treasury Department to Support Cuban Entrepreneurs
Internet-Based Services:
Measure: Authorizes the export of cloud-based services to support internet communication in Cuba.
Significance: This will allow Cubans to access and utilize services like instant messaging, social media, web hosting, video conferencing, collaboration platforms, and more, enhancing connectivity and communication.
Expansion of Installation and Repair Services:
Measure: Expands the authorization for services related to the installation, repair, or replacement of communications equipment, without specific export control classification restrictions.
Significance: Facilitates 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: Authorizes the export and re-export of Cuban-origin software and mobile applications from the United States to third countries.
Significance: This will allow Cuban developers to market their products in international markets, fostering the growth of the Cuban tech sector.
Redefinition of "Independent Private Sector Entrepreneurs":
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.
Significance: Increases recognition and support for a larger number of Cuban entrepreneurs, promoting a more robust and diversified private sector.
Bank Accounts in the U.S. for Cuban Entrepreneurs:
Measure: Authorizes independent private sector entrepreneurs from Cuba to maintain and use bank accounts in the United States.
Significance: Facilitates international financial transactions, allowing these entrepreneurs to access banking services and conduct business more easily.
Authorization of "U-turn" Transactions:
Measure: Reinstates the authorization for "U-turn" transactions, allowing banking institutions to process fund transfers involving Cuba, provided they originate and terminate outside the United States and do not involve persons subject to U.S. jurisdiction.
Significance: Improves the flow of remittances and payments for authorized transactions in the Cuban private sector, economically supporting entrepreneurs and their businesses.
Update of Reporting Requirements for Telecommunications Transactions:
Measure: Replaces the requirement to send reports by fax or postal mail with the option to submit them via email.
Significance: Simplifies and streamlines the reporting process for entities providing telecommunications services, increasing administrative efficiency.
Correction of Licenses for Educational Activities:
Measure: Corrects a typographical error in the general licenses for educational activities, restoring authorization for transactions beyond those related to travel.
Significance: Clarifies and expands the possibilities for U.S. educational institutions in their interactions and collaborations with Cuba, enhancing academic and cultural exchange.
FAQs on New Treasury Department Measures for Cuban Entrepreneurs
To provide clarity on the new measures introduced by the U.S. Treasury Department, here are some frequently asked questions and their answers:
Who will be able to open bank accounts in the United States?
Independent private sector entrepreneurs from Cuba, 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 businesses with up to 100 employees. These entrepreneurs will be able to open and use bank accounts in the United States for authorized or exempt transactions under the regulations.
What types of internet-based services will be authorized for export to Cuba?
Authorized services incidental to internet communication will include instant messaging, social media, web hosting, video conferencing, collaboration platforms, online gaming, and e-learning platforms, among others. Support services such as software design, business consultancy, and IT management services, including cloud-based services, will also be authorized.
What changes have been made to the definition of "independent private sector entrepreneurs"?
The definition of "independent private sector entrepreneurs" now excludes prohibited officials of 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 businesses with up to 100 employees, providing a more inclusive framework to support a wider variety of entrepreneurs in Cuba.
What are "U-turn" transactions and how will they benefit Cubans?
"U-turn" transactions allow banking institutions to process fund transfers involving Cuba, provided they originate and terminate outside the United States and do not involve persons 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.