On May 28, the U.S. Treasury Department announced that it has prepared new regulations “to increase support for the Cuban people [that} update and clarify authorizations in support of internet-based services to promote internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for the Cuban people.”[1]
These new regulations “update and clarify the scope of authorized internet-based services, including by adding examples of authorized services incident to the exchange of communications over the internet and updating the authorization for services in support of such communication. Additional examples of authorized services include social media platforms, collaboration platforms, video conferencing, e-gaming and e-learning platforms, automated translation, web maps, and user authentication services. [They are] also clarifying that persons subject to U.S. jurisdiction may provide cloud-based services (including remote data storage, data transport service, content distribution networks, virtual machines, software-as-a-service, and infrastructure-as-a-service) to support services incident to the exchange of communications over the internet.”
The new regulations also “expand the authorization for services, including training, to install, repair, or replace items related to communication, or items used to develop software that improves the free flow of information or that will support private sector activities in Cuba consistent with the export or reexport licensing policy of the Department of Commerce, including by removing the requirement that referenced items fall within specific export control classification parameters. [They also are] further authorizing the export or reexport of Cuban-origin software and mobile applications from the United States to third countries, which will expand the ability for independent Cuban entrepreneurs to offer their software and mobile applications on global application stores.”
The new regulations add a “new term ‘independent private sector entrepreneur.’ The new term continues to include self-employed individuals, such as owners or employees of private businesses or sole proprietorships, but the amended definition now also includes private cooperatives or small private businesses that are wholly owned by or consisting solely of such individuals. In each case, the new term is limited to private cooperatives, small private businesses, and sole proprietorships located in Cuba of up to 100 employees. The amended definition better reflects Cuba’s non-state sector, as Cuba now authorizes the establishment of small- and medium-sized private enterprises. Finally, [the Department] is excluding prohibited Cuban officials and prohibited Cuban Communist Party members from the new term to ensure they do not take advantage of U.S. actions intended to benefit independent private sector entrepreneur.”
The new regulations authorize “independent private sector entrepreneurs who are Cuban nationals to open, maintain, and remotely use U.S. bank accounts, including through online payment platforms, to conduct authorized or exempt transactions, whether the independent private sector entrepreneur is physically located in the United States, Cuba, or another country.”
The new regulations reinstate “authorization for ‘U-turn’ transactions, which are funds transfers that originate and terminate outside the United States where neither the originator nor beneficiary is subject to U.S. jurisdiction. [The Department] previously removed the authorization for ‘U-turn’ transactions in September 2019. This reinstated authorization is intended to help the Cuban people, including independent private sector entrepreneurs, by facilitating remittances and payments for transactions in the Cuban private sector that are authorized by various provisions of the [regulations]. Under this reinstated authorization, U.S banks are authorized to process ‘U-turn’ funds transfers in which Cuba or a Cuban national has an interest, provided that neither the originator nor the beneficiary is a person subject to U.S. jurisdiction.”
Finally the new regulations authorize “the unblocking and return of any ‘U-turn’ funds transfer that was blocked prior to this reinstatement of the ‘U-turn authorization.”
A senior U.S. official “said that it was ‘essential’ for the Biden administration to make sure the private sector continues to expand on the island.”
Reactions
This is great news! Cuba’s private sector is helping ordinary Cubans cope with the extraordinary problems of the Cuban economy.
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[1] U.S. Treasury Dep’t, Treasury Amends Regulations to Increase Support for the Cuban People and Independent Private Sector Entrepreneurs (May 28, 2024); Torres, In a first, Cuba’s private business owners will be able to use U.S. banks, Miami Herald (May 28, 2024).